Diversity as Good Business
On September 30, 2020, Governor Gavin Newsom of California signed into law a bill that requires publicly held companies headquartered in the state to include board members from underrepresented communities. This decision follows a wider trend that has seen Norway mandate that at least forty percent of upper executives in each company be female and the NASDAQ require all of its companies to have at least one woman and/or bipoc on their respective boards. Companies that do not comply with this bill will face fines in the six figure range as well as an inevitable negative impact on their brands and reputations.
Unsurprisingly, conservatives have provided staunch resistance to this bill. Beyond amorphous warnings claiming that this stipulation will constrict business, there has been criticism that “limiting a person’s opportunity based solely because of their skin color, sex, or sexual orientation” (Anastasia Boden, Pacific Legal Foundation) is unconstitutional. It is difficult, however, to take seriously this recent and familiar instance of the right’s cynical adoption of handpicked social justice issues. In regard to purely economic affairs, there appears to be little cause for alarm, as the bill is not a financial policy and does not regulate the Californian economy in any way. From a social perspective, one cannot help but remember that “233 of the public-company boards in California have no members from underrepresented communities” (LA Times). If combatting the centuries-long dominance of an entrenched demographic is considered “limiting a person’s opportunity,” then our definition of opportunity surely deserves some editing.
California is the most populous as well as the most diverse state in the country. It seems practical that the boardrooms of some of the state’s most powerful entities should reflect the vibrant course of the state as a whole. Beyond being ethically sound, such a policy would conceivably allow companies to better connect with a wider array of demographics. This is not to say that one woman speaks for all women or that one Latinx person represents the beliefs of all Latinx people, but rather that the inclusion of such minorities lessens the chances of a board inadvertently making decisions that might needlessly alienate or offend vast segments of potential customers. Although Newsom’s policy might seem inconsequential when applied to a company with thousands of employees, the people at the top of a company naturally not only have a major influence on the direction of business, but also have an outsized effect on the company’s public image. Advertising revolves around subconscious messaging and executives should know this better than anyone. Seeing a woman or a bipoc in a picture of a company’s boardroom or standing at a company podium might be the final association necessary for a consumer to begin patronizing that company.
Ultimately, however, this bill does not represent a meaningful victory or defeat for either progressives or conservatives. It is one of the many practically cosmetic changes progressives have succeeded in orchestrating over the years that do nothing to substantively shift the status quo. As we have seen throughout the corporate world, businesses run by women, racial minorities, and LGBTQ people are more than capable of towing the capitalist line endorsed by the United States and its allies. Indeed, conservatives should welcome this bill as a chance to broaden the reach of their gospel of wealth and inculcate ever more people with the fever of materialism. Such considerations might not move many critics of this bill, however, and regardless, the prejudices that still run rife through much of the conservative world would probably preclude such an expansive and accommodating “big tent” outlook. Additionally, it is ultimately foolish for progressives to resent this bill. Corporate America has the roots of a Sequoia and no amount of wishful thinking will banish the immediate presence of board rooms and quarterly reports. Rather, one should look at this bill as a device that at worst is harmless and at best might profoundly shake up the culture of entitlement and complacency governing numerous companies.