Nasdaq Inc. — also known as the Nasdaq Stock Market — is sending a powerful message to Corporate America to push for more diversity.
This past Tuesday, Nasdaq filed a proposal with the U.S. Securities and Exchange Commission (SEC) to adopt new listing rules that would otherwise require listed companies on the U.S. stock exchange to show and prove some measure of diversity on its boards of directors, CNN reports.
According to the company’s announcement, the new rules would also make it mandatory for listed companies to “have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority1 or LGBTQ+.”
With this new proposal, Nasdaq is aiming to make the boardrooms at its 3,000-plus list of companies less white and male-skewed requiring them to hire directors that better reflect America’s diverse population.
“This proposal and partnership gives companies an opportunity to make progress toward increasing representation of women, underrepresented minorities and the LGBTQ+ community on their boards,” said Nelson Griggs, President of Nasdaq Stock Exchange, in a prepared statement. “Corporate diversity, at all levels, opens up a clear path to innovation and growth. We are inspired by the support from our issuers and the financial community with this effort and look forward to working together with companies of all sizes to create stronger and more inclusive boards.”
The overarching goal for the proposal is to offer stakeholders in these listed companies a better grasp of board composition for the companies they’ve invested in. It also aims to enhance investor confidence to ensure companies are making active steps toward more diversity and inclusion.
“Nasdaq’s purpose is to champion inclusive growth and prosperity to power stronger economies,” said Nasdaq President and CEO, Adena Friedman, in a statement. “Our goal with this proposal is to provide a transparent framework for Nasdaq-listed companies to present their board composition and diversity philosophy effectively to all stakeholders; we believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America.”
So far, the new proposal has been endorsed by several stakeholders, including TechNet President & CEO Linda Moore; American Civil Liberties Union executive director Anthony Romero; Nasdaq Chairman Michael Splinter and Directors Charlene Begley and Alfred Zollar.