End of Meritocracy? Regulators Approve NASDAQ’s Board Diversity Rule Changes

Regulators approved Nasdaq’s greater board diversity proposal, one that will include gender and race in its listing rules.

In a Friday order, staffers at the Securities and Exchange Commission agreed to Nasdaq’s proposed rule changes, the Wall Street Journal reports. This means any Nasdaq-listed companies would need to meet certain targets for the gender and ethnic diversity of their boards, or provide written explanations as to why they aren’t doing so.

This means that for most U.S. companies, the target would be to have at least one woman director and one who identifies as a racial minority or lesbian, gay, bisexual, transgender or queer.

Companies would also be required to provide board diversity statistics.

“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders,” SEC Chairman Gary Gensler said in a statement.

“We are pleased that the SEC has approved Nasdaq’s proposal to enhance board diversity disclosures and encourage the creation of more diverse boards through a market-led solution,” Nasdaq said in a statement.