Goldman Sachs’ CEO, David Solomon, pledged for more diversity among board members at the end of January, when he announced that starting July 1st, 2020, companies in the U.S. and Europe will not be taken public if they don’t have at least one diverse member on the board. Solomon didn’t specify the definition of “diverse”, but he did say that companies should be focusing on women.
This new policy is being put into place after Goldman Sachs’ research on diversity and performance found that companies with “at least one diverse board member saw a 44% jump in their average share price within a year of going public, versus 13% at companies with no diverse board members”1. Yet, in the last two years, more than 60 companies in the U.S. and Europe went public without any women on the board.
At the moment, the diversity-board initiative is only for American and European companies and doesn’t apply to businesses in Asia, Latin America, and the Middle East, regions that have a large number of male-majority boards. However, Solomon added that Goldman Sachs recognizes the different meanings of diversity around the world and that the company does intend to expand this policy to other countries outside the U.S. and Europe 2.
Almost a year after its implementation, IPOs will face an even higher standard 3. In June 2021, the rule will increase from having one diverse member to at least two, taking a further step for integrating diversity among the board. Currently, Goldman Sachs has four women on an eleven-member board.
There is still a long way to go when it comes to gender equality and opportunities with women in leadership, but this appears to be a huge step forward.