California lawmakers press corporations to add women, people of color to board rooms

The Legislature’s diversity caucuses representing minorities, women and gay Californians are pressuring corporations headquartered in the state to diversify their leadership teams.

The caucuses on Monday announced they sent hundreds of letters to California’s largest companies, urging them to comply with two state laws that mandate the appointment of women, people of color and sexual minorities to serve as board directors.

“It’s time for these companies — many of which are based here in California — to channel their words into decisive action,” said Assemblyman Evan Low, D-Cambell, in a statement. “Representation matters because those diverse, lived experiences have the potential to reverberate across a company’s culture, inspire the next generation of leaders and make companies more accountable to their customers.”

The campaign is being led by the California Asian & Pacific Islander Legislative Caucus, the California Latino Legislative Caucus, California Legislative Black Caucus, California Legislative LGBT Caucus, California Legislative Jewish Caucus and the California Legislative Women’s Caucus.

California’s wealthiest companies, including Apple and Facebook, are among the 600-plus companies that received letters from the diversity caucuses, according to a release sent by Low.

One law signed by Gov. Gavin Newsom last year, Assembly Bill 979, compels corporations to appoint more under-represented directors to California boards. That law defines an under-represented director as someone who self-identifies as Black, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, or LGBTQ.

It mirrors a previous law, Senate Bill 826, that requires the board appointments of women, signed by Gov. Jerry Brown in 2018.

Companies that don’t comply with the law can face hefty fines of $100,000 to $300,000 from the Secretary of State.

The two laws are currently facing legal scrutiny.

Last month, the 9th Circuit Court of Appeals ruled that it would allow a lawsuit claiming the gender diversity law was unconstitutional and required shareholders to “discriminate on the basis of sex” to move forward. The conservative group Judicial Watch also filed lawsuits challenging the mandates.

In a press release, leaders of the Legislature’s diversity caucuses acknowledged that diversity across the board is important, but that companies must also strive to include the most underrepresented minorities, who have the lowest representation across the state in company leadership.

In a state where Latinos account for about 40% of the population, they make up just 2.3% of board appointments, according to an analysis of 678 public companies headquartered in California by the Latino Corporate Directors Association.

Women are also underrepresented in California’s boards of directors. Women hold 26.5% of public company board seats in California, and women of color account for 6.6% of those seats, a report by the California Partners Project shows.

Legislation requiring both women and underrepresented minorities to have a seat at the table would help those groups with the lowest representation now, Assemblywoman Cristina Garcia, D-Bell Gardens, chair of the California Legislative Women’s Caucus, wrote in a statement.

Following the murder of George Floyd and a wave of Black Lives Matter protests, many tech companies publicly pledged to increase diversity company-wide. Some like Apple, Alphabet and Facebook already have at least one woman and one underrepresented minority member on boards — and are in compliance with the state laws,

State Sen. Steven Bradford, D-Gardena, chair of the California Legislative Black Caucus, said that during protests last year, “we as a society began to examine the role companies have in dismantling institutional and structural racism,” and that these laws and the caucuses’ letters are a way to hold California’s most powerful companies accountable.

“I would encourage these companies to look in the mirror at your boards or workforce — if both do not reflect the diversity of your community, you’re doing something wrong and you’re losing money in the process,” Bradford wrote. “Through greater diversity, you not only change the color of your board, but the culture of your company ‎as well.”

This story was originally published July 12, 2021 at 12:12 PM.