The how and why to diversify with a diversity plan

The global stock exchange Nasdaq Inc. has proposed new rules for the board of directors (BoD) of listed companies to meet specific minimum diversity requirements, or explain in a public disclosure why they are not doing, based on the EU comply or explain the principle and implement a diversity plan in the organization

The origin of this requirement is for the BoD to take a leadership role in having different ways to establish standards, particularly around gender diversity and raise the awareness around the benefits of diversity.

Comply or Explain. The next step in this effort is to get the rule approved by the Securities and Exchange Commission. The consequences of non-compliance can result in a company being delisted because of failing to meet Nasdaq’s diversity rules.

The comply-or-explain rule requires companies to report and explain when they cannot comply, with a good reason to be able to provide that explanation to investors.

The race and gender identity of a company’s board directors are claimed to influence its performance and its returns to investors. In addition to diversity, the elements of ESG—the environmental, social and governance aspects focuses on is how to achieve the financial returns to the stakeholders.

Includes both gender and LDBTQ components. Many studies indicate that having a more diverse board improves a company’s financial performance and lowers companies’ risk profile and improves risk management.

Most companies intend to give the right resources and the knowledge to understand how to achieve their goals of meeting more diversity, including at least one director who identifies as female and identifies as an underrepresented minority LGBTQ.

Nasdaq aims to champion inclusive growth and prosperity to power stronger economies and start a broader journey to achieve inclusive representation across global corporate listed companies. Companies are under increasing pressure from investors and advocates to improve diversity and be more transparent about their workforces’ makeup.

The proposed rule would also require all Nasdaq-listed companies to disclose diversity statistics regarding their directors. Foreign companies could satisfy the requirement by including two female directors.

The above topics will be discussed at the quarterly Directors Dialogue seminar on the on the 28th of April 2021 from 14:00 to 16: 00 CET. As well as The International Board of Directors Day on the 4th of May 2021

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