In what will be remembered as a watershed moment for LGBTQ+ inclusion, the Securities Exchange Commission (SEC) today approved a Nasdaq proposal aiming to diversify corporate boards by requiring Nasdaq-listed companies to meet certain board diversity requirements and disclose diversity statistics about their boards. Under this new rule, most U.S. companies listed on the Nasdaq will be required to have at least one woman director and one director who self-identifies as a racial minority or as LGBTQ+.
This decision follows a recommendation letter submitted by Out Leadership, alongside global Out Leadership sponsor Ropes & Gray and founding Quorum sponsor KPMG, with support from partner organizations Ascend Pinnacle, the Black Corporate Directors Conference, and the Latino Corporate Directors Association, to the Nasdaq outlining the crucial value of LGBTQ+ inclusion in board diversity practices. Because of the advocacy work done by Out Leadership and its partners, over 3,000 companies will be required to address LGBTQ+ diversity at the highest levels of their businesses within the next four years.
As Fabrice Houdart, Out Leadership’s Managing Director of Global Equality Initiatives, wrote earlier this year,
“Because boards deal with strategy and governance, at Out Leadership, we strongly believe it is crucial for LGBTQ+ people that they start being represented on corporate boards…It is not only a question of social justice and fairness but it is mostly about ensuring that we are shaping a future that takes LGBTQ+ needs into consideration.”
With this ruling, the SEC is saying that LGBTQ+ voices and identities matter. Having LGBTQ+ serve on corporate boards – the highest levels of the business world – is vitally important to the LGBTQ community and the business community. For far too long, corporate boards have escaped the spotlight and managed to continue the status quo. The current board makeup of companies in the Fortune 500 is simply not representative of the customers they are supposed to represent. For example, a Gallup poll in February found that although about 9.1% of millennials identify as LGBTQ+, only 0.4% of board seats in the Fortune 500 are openly LGBTQ+.
This announcement, while welcome, is long overdue.
According to Todd Sears, Founder and CEO of Out Leadership,
“For too long LGBTQ+ leaders have been excluded by the closet and lack of recognition of companies (only 12 companies in the entire Fortune 500 are often with the excuse of ‘privacy’ used to stop sexuality and gender identity being accounted for. Out Leadership’s global Visibility Counts and other research (quoted 7 times in Nasdaq’s SEC application) clearly shows that indeed LGBTQ+ people will, and do want to self-identify at all levels of organizations–including at the board level. Our community can’t stand up and be counted, and boards can’t benefit from the diversity of thought and perspective we bring if companies force LGBTQ+ leaders to remain in the shadows.”
Out Leadership believes that today’s decision from the SEC symbolizes a continuous and growing movement towards LGBTQ+ equality in all aspects of the business world. In an interview with Bloomberg, Georgetown University Law Center professor Hillary Sale commented that “The fact is a lot of companies, in particular in the last two years, have made a lot of progress in this direction. The writing’s on the wall in lots of ways.”