Legislation Requiring Diversity Disclosures Introduced in House

Representative Gregory Meeks, D-New York, and Senator Bob Menendez, D-New Jersey, reintroduced the Improving Corporate Governance Through Diversity Act of 2023 last week, bringing forward a bill that would require publicly listed companies to disclose the gender, racial and ethnic composition of their directors and executives.

The legislation was introduced in the House by Meeks on Thursday. If passed, the bill would require issuer proxy statements and director election disclosures to the Securities and Exchange Commission to include information on the gender, ethnic and racial composition of the issuer’s directors, nominees for director positions and executive officers. Issuers may only obtain this information from voluntary self-disclosure by the directors and executives.

Issuers would also have to disclose if they have a strategy or policy for increasing their diversity and provide information on that policy if they do.

If the bill passed, starting 18 months after the bill’s passage and continuing every year thereafter, the SEC would issue a report to Congress identifying trends in corporate diversity, also publishing the report on its website.

Meeks has introduced this bill in every Congress since 2017. The last iteration of the bill was introduced in 2021 and passed the House Committee on Financial Services by voice vote in 2021, but it was never taken up by the Senate.

According to a press release published by Meeks, the legislation is motivated in large part by a desire to see improvement in both corporate diversity and overall performance.

In a statement, Menendez said, “Without greater diversity in top corporate positions, the U.S. will be at a disadvantage in our efforts to outcompete other leading economies.”

Meeks added, “Shareholders and employees have a right to know whether corporations recognize diversity as a core value, especially considering the competitive advantage it affords the U.S. in the broader global economy.”

The Securities Industry and Financial Markets Association, representing securities firms, banks and asset managers, endorsed the legislation.

“SIFMA and our members have long prioritized diversity and inclusion in the financial services industry, and we understand there is still much more to do,” the DC-based association wrote in a statement. “We recognize that achieving diversity requires an ongoing commitment to diversity policies and practices, as well as regular assessments to evaluate the effectiveness of workforce and employment practices, business practices and supplier diversity, and transparency of organizational diversity and inclusion.”