Race and Gender Checks Coming to a Boardroom Near You

“The Office of the New York City Comptroller was created in 1801 to be the chief auditor of local government and all its various financial activities. The comptroller’s top responsibilities, as bullet-pointed on the office’s website, are “conducting performance and financial audits of all City agencies,” “serving as a fiduciary to the City’s five public pension funds,” “providing comprehensive oversight of the City’s budget and fiscal condition,” “reviewing City contracts for integrity, accountability and fiscal compliance,” and “resolving claims both on behalf of and against the City.”

Or, you know, pressuring private companies to do race and gender checks.

On Thursday, New York Comptroller Brad Lander proudly announced that the city’s pension funds, with their estimated $263 billion under management, had successfully pressured four huge Wall Street firms (Goldman Sachs, Morgan Stanley, JPMorgan Chase, and BlackRock), plus Ford Motor Company, to publicly disclose a “Board Matrix” containing the “self-identified gender, race and/or ethnicity of individual directors.””

“What Lander and the pension funds are explicitly saying is that not knowing the racial and gender self-identification of a company’s board candidate hinders the decision-making process on how to vote. All things else being equal, if Terry Smith self-identifies as a white male instead of a Latinx female, the diversity-valuing city of New York is assumed to be more likely to vote “no” on his candidacy. (One can only imagine where voters’ preferences would lie if the nominee refused to self-identify with either a gender or a race.)

There is something both farcical and creepy about this obsession with tracking other people’s (mostly) immutable characteristics and using the power of government to compel disclosure thereof. “Race and/or ethnicity” is a tautologically unscientific classification, not improved upon by the city’s suggested “best practices” categories of African American, Asian/Pacific Islander, white/Caucasian, Hispanic/Latino, and Native American. What box should Tiger Woods check? Why are we asking individuals to join a group? What on earth does any of this have to do with providing an auditing function on a city government with a $100 billion budget and the highest taxes in the country?

Gotham is hardly alone in conducting race/gender checks on big business. Illinois since last year has required publicly traded companies based in the state to not only provide a board diversity report, but also a “description of the corporation’s policies and practices for promoting diversity, equity and inclusion among its board of directors and executive officers,” and “whether and how demographic diversity is considered” in senior hiring. A newer law imposes further diversity reporting requirements on any private company with more than 100 employees.

Maryland in 2019 passed a Gender Diversity in the Board Room law requiring publicly traded companies with sales higher than $5 million and nonprofits with budgets higher than $5 million to submit the gender information of their boards.

And just last month, a Superior Court judge struck down as unconstitutional a 2020 California law requiring publicly traded companies in the state to have on their boards at least one member who self-identifies as “Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or…as gay, lesbian, bisexual or transgender.”

The Nasdaq, meanwhile, has imposed board-composition requirements of its own (approved by the Securities and Exchange Commission) that could get noncompliant companies delisted as soon as 2023.”

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