Even without the Nasdaq rule, corporate boardrooms got more diverse
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The boardrooms of most major companies are no longer completely male-dominated — globally nearly all large public firms now have at least one woman director.
Why it matters: It's a reflection of a big push for diversity in the boardroom that's now stalled out.
- Amid the DEI backlash, and on the cusp of an administration openly hostile to diversity efforts, progress could even move backwards.
Driving the news: This week a federal court struck down a rule that required firms listed on the Nasdaq to include at least one woman, person of color or LGBTQ director on their boards — or explain why they don't.
- The rule, approved by the Securities and Exchange Commission, was established in 2020 — and companies had just started sending Nasdaq information last year.
- Even though it wasn't in effect very long, the provision, along with another diversity law passed in California but later overturned in court, seems to have driven some progress.
- Boards are more diverse now than in 2020 in terms of gender and race.
The big picture: For years, advocates argued that a variety of perspectives is good for business — not just in terms of demographics but also expertise and experience.
- Now opponents are aggressively pushing back on that argument in court, with more anti-diversity efforts expected after President-elect Trump takes office.
- After a surge in 2020 and 2021, companies are actually now appointing fewer women and people of color to their boards.
By the numbers: Data on the board composition of the more than 3,000 Nasdaq firms is hard to come by. But we can clearly see the trends from other reports on public companies.
- In 2024, women made up 34% of directors on the S&P 500, up from 27% in 2020, according to an analysis from the Conference Board.
- Gender diversity also jumped on the broader Russell 3000 to 29% from 21% over that time period.
- Racial diversity increased too. In 2024, 26% of S&P 500 directors were people of color, up from 20% in 2020.
- Globally, the boards of most large firms now have at least one female director, per a 2024 analysis of 1,792 major companies across 44 countries conducted by Egon Zehnder.
Yes, but: After a surge in 2020 and 2021, companies are actually now appointing fewer women and people of color to their boards.
- The share of new directors who were women, appointed globally in 2024, fell to 14% from 16% in 2022 and 17% in 2020, per Egon Zehnder.
- The proportion of new directors who were Black at S&P 500 companies fell to 10% in 2024 from 26% in 2022, per the Conference Board.
- "There are some indications that the shift to defending DEI rather than promoting it has created a chilling effect," write the authors from Egon Zehnder.
Between the lines: For a long time, shame was a powerful motivator for bigger companies when it came to board diversity.
- In October 2013, critics called out Twitter for having an all-male board. There were three directors named Peter, but no women — a data point that caught people's attention.
- By December of that year, the social media company appointed its first female board member, Marjorie Scardino.
- Now, with Elon Musk at the helm, the renamed X has no directors at all. And Musk is hardly one to be shamed into action on this front.
The bottom line: These days companies announcing that they want more women or people of color in leadership positions are actively being criticized, and sometimes sued for these efforts.
- The forces of shame might be working in the opposite direction.
