CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Will Nasdaq’s board diversity push work? Canada provides some clues

December 2, 2020, 2:05 PM UTC

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.

Good morning, Broadsheet readers! Sephora ditches J.C. Penney for Kohl’s, Unilever tries out the four-day workweek, and we parse the latest board diversity news. Have a wonderful Wednesday.

– All about board diversity. Call it the board diversity news dump. The last few days have featured big announcements on new initiatives and research about gender diversity in the boardroom.

First and most noteworthy was Nasdaq’s announcement yesterday that it will ask the Securities and Exchange Commission for permission to implement a new rule requiring the 3,249 companies listed on its main U.S. exchange to have at least one female director and one “diverse” director, meaning a person who “self-identifies as either an underrepresented minority or LGBTQ+,” according to the Nasdaq statement.

Companies that fail to meet the requirements risk being delisted unless “they provide a public explanation of their reasons for not meeting the objectives,” the statement says.

Nasdaq President and CEO Adena Friedman said the purpose of the initiative is “to champion inclusive growth and prosperity to power stronger economies.” In the last six months, 75% of Nasdaq-listed companies did not meet the diversity requirements Nasdaq proposed Tuesday, according to The New York Times.

The move is a first for a major U.S. stock exchange, but it comes as players in the public and private sectors introduce new efforts to diversify boardrooms. Goldman Sachs earlier this year said it wouldn’t take firms public unless they had one diverse board member, and in 2018 California passed a law requiring public companies to have at least one female director, following up with a similar mandate on racial diversity this fall.

Will the initiative work? A study released the day before Nasdaq’s announcement provided some clues.

Starting in 2014, companies on the Toronto Stock Exchange had to disclose the number of women in senior roles and their plans to improve diversity. After introduction of the so-called “comply or explain” approach, women’s presence on public boards increased considerably. At the time the regulation went into effect, 67% of the 100 largest public companies in Canada had at least one female director. As of May this year, 96% had such representation, with about half of those companies seating three or more women in director roles.

The study, conducted by KPMG, did unearth some lingering shortcomings. There are still two men for every woman among corporate directors and three men for every woman at the executive level. Half of the men who snagged senior executives roles landed in the C-suite, compared to 39% of women.

Still, one of the biggest worries about board quotas—that directorships will go to “token” women who are under-qualified—didn’t materialize.

In Nasdaq’s announcement, it said it included in its proposal more than two dozen studies that found an association between diverse boards and better financial performance and corporate governance.

On Tuesday, there was another study to add to the list.

Energy research organization BloombergNEF and the Sasakawa Peace Foundation found that companies with at least 30% female boards have a better track record of developing policies and methods to address climate change.

Claire Zillman
claire.zillman@fortune.com
@clairezillman

Today’s Broadsheet was curated by Emma Hinchliffe

ALSO IN THE HEADLINES

- Settling the score. The U.S. Women's National Team and U.S. Soccer settled the part of the team's gender discrimination lawsuit about working conditions. As part of the settlement, U.S. soccer will implement new policies related to hotels, staffing, and travel. Wall Street Journal

- Big-box beauty. Sephora flipped from one woman-led Fortune 500 retailer to another. The beauty chain abandoned Jill Soltau's struggling J.C. Penney in favor of Michelle Gass's Kohl's as its department store partner. Sephora will open 850 permanent shops inside Kohl’s stores by 2023. Fortune

- Future forecast. Every December, Fortune makes predictions for the upcoming year in our Crystal Ball package. Our bets for 2021? Nancy Pelosi's last tour as House speaker, 2 million women lost from the U.S. labor force, and the rise of singer-songwriter Ashnikko. Fortune

- Go IPOs. At Fortune Brainstorm Tech yesterday, New York Stock Exchange president Stacey Cunningham weighed in on the 2021 IPO market. "The value of the public markets was on display" as companies went broke records, going public in droves in 2020, Cunningham says, and she expects that to continue in the new year. Fortune

MOVERS AND SHAKERS: Karey Burke, president of ABC Entertainment, will take over as president of 20th Television as part of a studio restructuring at Disney. SoulCycle hired Evelyn Webster, former CEO of Guardian News & Media's international operations, as its own chief executive. Katharine Weymouth, the former publisher of the Washington Post, joins the board of journalism nonprofit SpotlightDC. Blue Apron hired Charlean Gmunder, former VP of catering operation at United Airlines, as COO. Rite Aid hired Engage U founder Texanna Reeves as VP of diversity, equity, and inclusion. Cecile Richards will step down as executive director of Supermajority, staying on as cofounder and board member; managing director of politics and organizing Amanda Brown Lierman will be the organization's new executive director. Wendy Gonzalez's position as interim CEO of Samasource will become permanent; she stepped into the role after the death of founder Leila Janah in January. 

IN CASE YOU MISSED IT

- Activating a fan base. Agnes Chow is known as the "goddess of democracy" in Japan, where her language skills and enthusiasm for Japanese culture have earned her a large following. But the 23-year-old activist still faces prison in Hong Kong after being arrested under Beijing's national security law. Washington Post

- The Kiwi way. The four-day workweek policy that was championed by Prime Minister Jacinda Ardern in New Zealand is seeing interest from other countries and companies. Unilever is the latest business to commit to trying out the new working model. Fortune

- Ready on Day One. Jen Psaki's return to the White House as President-elect Joe Biden's press secretary was surprising to some, after the former Obama communications staffer and State Department spokeswoman said she didn't plan to join the administration. Her decision to come onboard reflects a trend in Biden's appointments: prioritizing experience above nearly all else to hit the ground running during a crisis. Politico

ON MY RADAR

Elliot Page, Juno star, shares transgender identity CNN

The underside of Silicon Valley's cofounder mantra The Information 

Ellie Goldstein always wanted to be famous. Now she is Allure

PARTING WORDS

"That was a screwup."

-President Barack Obama on not awarding Dolly Parton a Presidential Medal of Freedom during his time in office