On December 19, 2018, Belinda Vega published "More Women On Boards Is Better For Business, And California Is Leading The Way" in Enterprising Women. Here is an excerpt:
One of the principal goals of a public company's board of directors is to enhance shareholder value, and studies show that more women on boards is better for business.
So why isn't Wall Street jumping at the opportunity to achieve gender parity? Board entrenchment—independent directors have been sitting on boards for too long. According to a 2016 study by Harvard Law, term limits are in place at only 3% of S&P 500 companies—a decrease from 5% in 2010. And those term limits range from 10 to 20 years. Wall Street is not making room for diversity.
Isn’t it a problem that we know board diversity improves performance, but the market is not correcting itself? Do we wait for the market to self-correct? A 2015 study by the United States Government Accountability Office estimated that if women continue to join corporate boards at their current rate, it will take more than four decades to achieve 50% female representation on public company boards.
The market cannot afford for us to wait 50 years. We need to take proactive measures now, and California has done exactly that. On September 30, 2018, Governor Jerry Brown signed a law, Senate Bill 826, mandating female representation on corporate boards. Germany, France, Spain, Norway, the Netherlands, and other European countries have similar laws, but California became the first state in the U.S. to take that step.