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Statement on Nasdaq’s Diversity Proposals – A Positive First Step for Investors

Aug. 6, 2021

Today, the Commission approved Nasdaq Stock Market LLC’s proposed rule changes related to board diversity and disclosure.[1] The new listing standards will require each Nasdaq-listed company, subject to certain exceptions, to have at least two diverse board members or explain why it does not.[2] The new listing standards also will require disclosure, in an aggregated form, of information on the voluntary self-identified gender, racial characteristics, and LGBTQ+ status of the company’s board.[3] We support the proposal because it represents a step forward for investors on board diversity.

As we have noted in the past, investors are increasingly demanding diverse boards and diversity-related information about public companies.[4] Nasdaq’s proposal should improve the quality of information available to investors for making investment and voting decisions by providing consistent and comparable diversity metrics.[5]

Nevertheless, there is more work to be done in improving both diversity and transparency at public companies and in our capital markets more broadly. For example, disability may be a relevant characteristic, as well as diversity among senior management and the workforce more broadly. There is a continued, harmful disparity in the representation of a wide range of communities in our capital markets. Because enhanced diversity is critically important for investors, the markets, and our economy, we hope this is a starting point for initiatives related to diversity, not the finish line.

[1] See Securities Exchange Act Release No. 34-92590 (August 6, 2021) (order approving SR-NASDAQ-2020-081 and SR-NASDAQ-2020-082) (“Order”).

[2] See id.

[3] Nasdaq also will offer a complimentary board recruiting service for certain eligible Nasdaq-listed companies. See id.

[5] See Order at 25 (“The Commission finds that the Board Diversity Proposal would provide widely available, consistent, and comparable information that would contribute to investors’ investment and voting decisions.”).

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