More women than men were appointed to California corporate boards in 2021. Here’s why
California’s publicly traded companies appointed more women than men to their boards in 2021, likely for the first time ever, according to a report from the California Partners Project released Wednesday.
Women now hold nearly 30% of California’s public company board seats, nearly double the number in 2018, according to the report from a nonprofit founded by First Partner Jennifer Siebel Newsom. The report comes three years after California passed a law requiring public companies to hire more female directors to their boards.
“Where there’s a will, there’s a way,” said Olivia Morgan, co-founder and executive director at the California Partners Project. “When California companies have been focused on and required to diversify their board, they have done it with remarkable results.”
Sparked by the #MeToo movement, Senate Bill 826 passed in 2018 requires publicly traded companies headquartered in California to have at least one female director on their boards. By the end of 2021, companies with five directors need to have two women, while those with six or more directors need to have at least three women on their boards.
“All male boards are essentially a thing of the past among California’s public companies – and that gives us a competitive edge,” Newsom said in a statement. “More women on corporate boards translates to better decision-making, greater creativity and productivity, and a better bottom line. Companies with diverse boards simply perform better.”
Gov. Gavin Newsom in 2020 also signed a law requiring companies to have at least one director from an underrepresented community by the end of 2021.
Many California companies appointed women to their boards for the first time in the last three years. As of 2018, nearly 30% of California public companies had an all-male board, but the number stood at 1.3% as of March, according to the California Partners Project.
The report especially found high female representation in the energy and utilities industry as well as the entertainment and retail industry, with 36% and 33% of board seats held by women respectively. The report shows that companies can and have hired diverse groups of people to their boards of directors regardless of their industries, Morgan said.
“There were and have been qualified women candidates to serve on boards,” she said. “Public companies have been able to find 1,100 candidates to fill public company board seats in just three years.”
Nearly half of the companies, however, have yet to meet the requirement set by the 2018 law. About 12% of public companies need to add at least two women to meet the requirement, according to the report.
The report also noted a 2020 study which found that women only hold 11% of board seats in the country’s most heavily funded private companies.
Furthermore, several reports have found that companies are not hiring women of color to their boards. Latinas account for only 1% of board seats in California’s publicly traded companies, according to an April analysis by the Latino Corporate Directors Association.
The 2018 and 2020 laws also face legal challenges from conservative groups, who have argued the state is discriminating against certain classes. A Los Angeles judge recently heard arguments from the state and the groups on whether the 2018 law is constitutional.
The law calls for penalties of up to $300,000. But in defending the law, a California official testified that it was essentially toothless, saying there are no plans to penalize companies for not complying, according to the Associated Press.
Still, Morgan called the law a success, saying it has nudged many companies big and small to hire women to their boards.
“The law has been effective, because there’s virtually no companies without women on the boards now,” Morgan said. “California has made strides.”
This story was originally published December 15, 2021 at 12:41 PM.
