For years, the statistics have been glacial and disheartening. The percentage of women in the boardrooms of the largest U.S. companies has crept up from 15% in 2005 to just about 20% a full decade later.
To try to change that dynamic in corporate America's halls of power, investors have pushed companies to disclose more about diversity and add more women and minorities. Advocates have created databases of qualified women to fill director seats. Organizations such as major financial firms and executive recruiting shops have run study after study that both highlight the bottom-line benefits of greater board diversity and draw attention to the low numbers.
And now legislation is being drafted that would require companies to disclose gender diversity statistics and policies — or explain why they have none. Rep. Carolyn B. Maloney (D-N.Y.) said she plans to propose the first-of-its-kind legislation this month, modeled on policies in Canada and Australia.
An early draft of the legislation would require companies to share statistics on their boards' gender composition in their proxies, disclose their strategies in place to improve those numbers and direct the Securities and Exchange Commission to recommend strategies for increasing gender diversity. Her proposal would also have companies explain why if they're not complying.
"Requiring an explanation is so important — it forces them to think about it," Maloney said. "We should be nudging them along and giving those who are working to enhance the presence of women on boards a gold star."
Maloney wrote a letter to SEC Chairwoman Mary Jo White encouraging her to adopt a similar proposal made last year by the leaders of nine large state pension funds. Maloney also announced a report she requested from the Government Accountability Office that examined the slow progress on U.S. corporate boards. It found that even if women were hired to boards at the same rate as men, it would still take until 2056 for women to reach parity on corporate boards.
The prospect of legislation on the issue was cheered by diversity advocates.
"In general we're thrilled, frankly, that she's doing something," said Serena Fong, vice president of government affairs for the women's leadership nonprofit Catalyst, which consulted with Maloney's office on the legislation. "We need some conversation to get started on the topic that goes beyond 'here's the numbers, they're terrible, but we're not going to do anything about it.'"
Maloney's action is one of a small but growing number of signs that the issue could see more attention at the government level.
White, speaking at an event in New York in November, said that "while quotas are not the path we follow in the United States, the target goal of a minimum of 40% on the boards of all Fortune 1000 and S&P 500 companies by 2025 set by the Women's Forum of New York is within reach and an imperative."
In September, Rep. Don Beyer (D-Va.) introduced a nonbinding resolution that said corporations should commit to better gender diversity.
Several states have also drawn up similar nonbinding resolutions to urge that more women be added to boards. In 2013, the California Legislature passed a resolution urging more women on boards; it set minimums for different board sizes. The Massachusetts Legislature unanimously passed a similar resolution in October, and the Illinois General Assembly passed one in May. Cities are also getting in on the act, with both Philadelphia and New York taking action on the issue.
All these actions follow a rule by the SEC, which became effective in 2010, that asks boards to describe their diversity policies and how effective they are when nominating directors.
But advocates say the rule packs little punch. It does not require companies to disclose statistics on diversity, and it's vague enough that many companies don't share much. Melissa Blechman, who leads the public policy working group of the 30% Club in the U.S., said that "the critical part here is the SEC does not define diversity, and companies can simply comply with the rule by saying they don't have a diversity policy."
Maloney's proposal, while still in an early draft form, would require companies not only to share their policies and strategies on gender diversity but also to disclose a numerical statistic of their gender composition. It would also instruct the SEC to recommend strategies for increasing the number of women on corporate boards, and require companies to comply with those recommendations or explain why they aren't doing so.
The draft of Maloney's legislation currently does not include a voluntary target, but she said she plans to consult with a range of stakeholders in coming weeks to get their views about whether it would be appropriate to include one. She does not support the idea of quotas.
Some advocates note that a government-backed goal, voluntary or otherwise, could make business leaders wary. Kiersten Salander, chair of the U.S. 30% Club steering committee, said that while her organization is in favor of voluntary targets set by business leaders, it's hard to know whether stipulating a target at the federal level, even a discretionary one, would be successful. "The line between targets and quotas is blurry."