The bill would mandate reports on the racial, ethnic, and gender composition of the board of directors of the issuer, nominees for the board of directors, and executive officers. Companies would also need to report their policy, plan, or strategy to promote racial, ethnic, and gender diversity.
The U.S. House of Representatives passed the bill by a voice vote, meaning it wasn’t controversial, and it’s also supported by the corporate community. The bill was passed by the House in the last Congress, too, but it didn’t make it through the Senate.
A number of business groups, including the American Bankers Association, International Council of Shopping Centers, National Association of Investment Companies, and Retail Industry Leaders Association, sent a letter to the Senate Committee on Banking, Housing, and Urban Affairs in July 2020 expressing support for the bill because it would “organically boost diversity on boards through disclosure.” But that was to no avail.
The prospects for Senate passage this year are considerably better with 50 Democratic votes plus another potential “yea” from Vice President Kamala Harris.
The Council of Institutional Investors, which represents big pension plans, sent a letter to House bill sponsor Rep. Gregory Meeks (D.-N.Y.), saying: “We believe the proxy statement disclosures that would be required by the Act could contribute to enhancing U.S. public company board consideration of diversity generally consistent with our policies.”