October 01, 2020

By City News Service


Gov. Gavin Newsom today signed legislation, co-authored by several Southland lawmakers, that requires diversity on corporate boards in California.

AB 979, which requires publicly held corporations headquartered in California to have at least one director from an underrepresented community by the close of 2021, was jointly authored by Assembly members Chris Holden, D- Pasadena, Cristina Garcia, D-Downey, and David Chiu, D-San Francisco, with Assemblywoman Eloise Gomez Reyes, D-San Bernardino, and Sen. Ben Hueso, D-Chula Vista, as principal co-authors.

“The new law represents a big step forward for racial equity,” Holden said.

“While some corporations were already leading the way to combat implicit bias, now, all of California's corporate boards will better reflect the diversity of our state. This is a win-win as ethnically diverse boards have shown to outperform those that lack diversity.”

The bill's authors noted that soon after the social unrest following the killing of George Floyd, many corporations publicly stated their support for diversity and Black lives.

But they said public support for social justice movements often does not lead to long-term structural changes in hiring and retention policies, and cited a 2018 Deloitte analysis that found that out of 1,222 new board members of Fortune 100 companies, 77% were white.

“The lack of diversity on California's boards and upper-level corporate positions is a challenge we urged corporations to address on their own during our time in the Legislature,” Garcia said.

“However, it is clear we can no longer wait for corporations to figure it out on their own.

“By ensuring diversity on their boards, we know the corporations are more likely to both create opportunities for people of color and give them the support to thrive within that corporation,” she said.

“I'm excited this bill is signed and look forward to California continuing to lead the way in our fight for racial equity in general.”

Chiu, who chairs the Asian Pacific Islander Legislative Caucus, said the bill “recognizes that including the perspectives of underrepresented groups in leadership roles will result in more innovation, improved productivity and better economic outcomes.”

In addition to the 2021 benchmark, AB 979 also requires corporate boards to include two members from underrepresented communities for corporations with more than four members, while corporations with more than nine must have a minimum of three by 2022.

The bill defines a director from an underrepresented community as an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who self-identifies as gay, lesbian, bisexual or transgender.

Category: Business