Out Leadership Strongly Urges SEC to Approve Policy Requiring All US-Based Companies to Report Board Diversity Metrics

In Letter, Out Leadership States SEC Should Adopt "All Dimensions of Diversity Disclosure,” Citing Successful 2020 Nasdaq Collaboration to Secure SEC Approval of Board Diversity Requirement

As the U.S. Securities and Exchange Commission (SEC) considers a new board diversity rule proposal, Out Leadership, the premier global LGBTQ+ organization harnessing the power of business to drive equality, released a letter urging Commissioners to approve a policy requiring all publicly traded companies in the United States to report “all dimensions of diversity” inclusive of sex or gender, ethnicity, disability, sexual orientation, and gender identity during annual filings.


The full text of Todd Sears, Founder & CEO of Out Leadership, letter to SEC Secretary Vanessa Countryman is included below and can also be accessed online here.

Out Leadership partnered with Nasdaq to secure SEC approval of Nasdaq’s Board Diversity Policy.

“In 2020, the SEC approved Nasdaq’s board diversity requirement and today we are urging the SEC Commissioners to follow suit by also adopting a broad diversity requirement inclusive of all areas of diversity,” said Todd Sears, Founder & CEO of Out Leadership. “Our research, along with the overwhelming number of empirical research studies by other groups, demonstrates diversity helps drive forward business success and results in smarter decision-making in corporate boardrooms. Based on the research, and our two decades of partnering with leading global companies to transform corporate boardrooms, we urge the Commission to show its leadership by implementing a strong rule that is fully inclusive, transparent, and ensures America’s boardrooms reflect the diversity of our nation.”

As a result of a change in Nasdaq’s Board Diversity Rule which took effect in 2022, 50% of the 3,743 companies listed on the NASDAQ now include LGBTQ+ people in their definition of board diversity, an increase of 1656% from last year. Out Leadership’s research, which was cited by the Nasdaq seven times in a memorandum to the SEC on their Board Diversity Rule was instrumental in fueling these changes.

Out Leadership kicked off the global conversation on LGBTQ+ board diversity in 2014. In 2021, Out Leadership’s groundbreaking board diversity research study, Visibility Counts, mapped the board diversity policies of the entire Fortune 500 for the first time. In 2022, OutQUORUM published a significant update to the 2021 study that included the entirety of the Nasdaq and the Fortune 500 – 6,670 companies in total.

In 2023, Out Leadership released its third-annual OutQUORUM report, LGBTQ+ Board Diversity: Progress & Possibility. The 2023 OutQUORUM research went global, mapping the ASX 200, the Hang Seng Index, and the FTSE 350. Since Out Leadership began the global conversation on LGBTQ+ board diversity in 2014, the number of companies listed on the Fortune 500 with LGBTQ+ inclusive board diversity policies rose fifty-six times. Between 2022 and 2023, the number of companies with LGBTQ+ inclusive board diversity policies on the Fortune 500 rose four-fold. In the Fortune 1000, 23.2% of companies have LGBTQ+ inclusive board diversity policies, an increase of 566% from 2022.

To Speak with Todd Sears of Out Leadership about the SEC Board Diversity Proposal and/or Corporate Diversity, please contact kristofer@lunaeisenla.com.


February 20, 2024

Dear Ms. Countryman:

Out Leadership respectfully submits this letter to the U.S. Securities and Exchange Commission (SEC) to comment on its consideration of a rule proposal related to corporate board diversity.

Since its inception in 2010, Out Leadership has emerged as a leading global advocate for the business community on issues of LGBTQ+ equality. With membership comprising over a hundred of the world’s most influential corporations (refer to Appendix I for details), we have a profound understanding of our member companies’ needs and the tangible benefits that Diversity, Equity, and Inclusion (DEI) initiatives bring to the business landscape. For a comprehensive overview of Out Leadership’s mission and impact, kindly see Appendix II. Over the last 14 years, we have worked with these companies, as well as over 1,200 CEOs, to help these companies unlock the business value of LGBTQ+ inclusion, as well as to leverage their platforms to advocate for equality.

Out Leadership is also a member of the Thirty Percent Coalition, a group of institutional investors who represent over $8 trillion AUM.

Empirical research consistently demonstrates that diversity in its broadest sense helps groups make better decisions and avoid groupthink. For years, research has also illustrated that corporations with diverse leadership teams that are inclusive of gender, race, and ethnicity outperform their peers. Out Leadership has published more than 50 pieces of research and white papers, including numerous board diversity policies (for the US, Europe, Australia, and Asia) and has built the only board diversity mapping data in the world through our OutQUORUM board program.

Our data, and hundreds of other pieces of research going back decades, show clearly a pervasive, enduring demand among investors for data and disclosure on board composition, as evidenced by the preponderance of institutional investors, both large and small, that factor corporate board diversity into proxy voting decisions. These investors and companies do not focus on this data because of a social cause (though that is its own business case), but because they know that diversity drives innovation and decreases risk.

The Nasdaq is a case in point, with whom Out Leadership partnered on its board diversity requirement, which the SEC approved almost three years ago. Our research and board diversity structure were used throughout the application, and since its approval Out Leadership’s research has found that 1,871 Nasdaq-listed companies had LGBTQ+ inclusive board diversity policies in 2023, compared to only 113 in 2022 (a 1,556% increase following the implementation of the Nasdaq Rule). While many companies have implemented LGBTQ+-inclusive self-ID programs at every other level in their organizations, the boardroom often remains the last place to be included.

Despite broad consensus that board diversity data is decision-useful to investors and that there is widespread demand among investors for such information, the current disclosure framework does not address investor needs, does not include LGBTQ+ leaders in standard disclosure (despite thousands of companies now including them), and is best characterized as disorderly and inefficient. More broadly, there is no formal, standardized source of racial/ethnic, LGBTQ+, or disability data regarding board composition among U.S. listed companies, which imposes an undue burden on investors, necessitating excessive resources to procure such critical data.

Standardizing LGBTQ+ disclosure practices would ensure consistency across industries, preventing confusion and varying standards. This consistency would create a level playing field for companies, making it easier for investors and stakeholders to assess and compare diversity efforts. Out Leadership’s surveys have also shown that LGBTQ+ leaders are willing to self-disclose, given the opportunity, as they do at every other level of the vast majority of Fortune 500 companies. For further reference, Out Leadership’s “Visibility Counts” self-ID research published in 2019 has been used by over 100 companies around the world to implement self-ID practices in over 89 countries.

Other countries are leading the US in this board diversity disclosure. In the UK, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are advocating for a new minimum disclosure standard for financial services companies that is inclusive of sex or gender, ethnicity, disability, sexual orientation, and gender identity (for full matrix, see Appendix III). This proposal allows firms to report aggregate Board and Senior Leadership demographic data to address concerns around identifiability. Out Leadership recommends that the SEC adopts all dimensions of diversity disclosure mirroring the FCA and PRA framework.

Given the objectives of the SEC to protect investors and maintain fair, orderly, and efficient markets, we respectfully urge the Commission to mandate all U.S.-listed companies to disclose comprehensive Board and Senior Leadership diversity metrics within their proxy statements or alternative SEC filings.

Additionally, we request that such a rule include provisions to advance transparency, such as:

  • Disclosure based on voluntary self-identification; and
  • Reporting that disaggregates data by the categories in the Nasdaq Rule and supplemented with disability disclosure, in a format like that required by the Nasdaq Rule (i.e. “Board Matrix”). This enables investors to clearly ascertain the level of diversity among directors and facilitates comparability across companies.

Out Leadership appreciates the SEC’s consideration of these comments and would be pleased to discuss them in greater detail and provide our advising resources to the SEC. If you have any questions or need any additional information, please contact todd.sears@outleadership.com.


Todd Sears


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