Social justice comes for the boardroom: Goldman Sachs declares war on the straight, white, male corporate board
Investment bank Goldman Sachs won’t underwrite companies’ initial public offerings unless their boards have at least one “diverse” member. Social justice pandering or canny business move?
“Starting on July 1st in the US and Europe, we’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women,” Goldman Sachs CEO David Solomon said on Thursday at the World Economic Forum in Davos, Switzerland. “And we’re going to move towards 2021 requesting two,” he added.
Solomon’s understanding of the word “diverse” is ill-defined. Presumably, a “diverse” candidate is one drawn from the LGBT alphabet, or of any race other than white. Whether the transgender, the disabled, or people of minority religions qualify as “diverse” is likewise left unexplained.Also on rt.com Goldman going Greta green? Wall St bank stops financing new Arctic oil projects
Around 60 companies in the US and Europe have gone public recently with white, male boards, Solomon continued, adding that changing this is “something that we think is right.”
“Look, we might miss some business, but in the long run, this I think is the best advice for companies that want to drive premium returns for their shareholders over time,” he said. Nevertheless, Solomon insisted that diversity is better for the bottom line, noting that companies with at least one female director have had “significantly better” public offerings over the last four years than those without.
Diversity for diversity’s sake has become a mantra in Hollywood, and in the advertising campaigns of American megacorporations. Yet the public hasn’t always gotten on board. Razor manufacturer Gillette released an ad last year that delivered a sermon on “toxic masculinity,” which resulted in the firm taking an $8 billion writedown and parent company Procter and Gamble losing $5.2 billion in a quarter.
“Go woke, go broke,” conservative commenters joked at the time. Similar social-justice-infused campaigns from Nike, Pepsi, and Reebok all triggered a public backlash.Also on rt.com Swedish police seek more ‘diversity’ to tackle migrant crime — but applicants with foreign backgrounds struggle to make the grade
But the highest echelons of corporate America have thus far remained the realm of the white man. According to a 2018 Harvard study, men occupy 77 percent of board seats in Fortune 500 companies. 66 percent are filled by white men, while just over 16 percent are filled by minorities of either gender.
Goldman Sachs is not the first investment firm to try and change this. BlackRock Inc. and State Street Global Advisors both reject firms without a female director, while JPMorgan Chase has an advisory service that works with companies to find diverse board candidates.
In California, companies without a certain quota of female directors can be fined $100,000 under a 2018 law.
In the current climate, Solomon’s new policy is nothing out of the ordinary. However, some commenters think the Goldman CEO should go further in promoting diversity. TechCrunch suggested that the bank should only take public companies that pledge to donate to progressive causes, for example “1% of future profits to the NAACP,” in order to appeal to “founders and investors who truly want to be progressive.”
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