Pasadena Assemblymember’s Bill Requiring Diversity on Corporate Boards Signed into Law

Gov. Gavin Newsom on Wednesday signed into law legislation authored by former Pasadena City Councilman and current state Assemblyman Chris Holden (D-Pasadena) requiring the inclusion of underrepresented groups on corporate boards in California.

Holden’s Assembly Bill 979 requires publicly held corporations headquartered in California to have at least one director from an underrepresented community by the close of 2021.

“The new law represents a big step forward for racial equity,” Holden said in a prepared statement. “While some corporations were already leading the way to combat implicit bias, now all of California’s corporate boards will better reflect the diversity of our state. This is a win-win as ethnically diverse boards have shown to outperform those that lack diversity.”

In addition to the 2021 benchmark, AB 979 also requires corporate boards to include two members from underrepresented communities for corporations with more than four members, while corporations with more than nine must have a minimum of three by 2022. The bill defines a director from an underrepresented community as an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.

Soon after the social unrest following the officer-involved death of George Floyd on May 25, many corporations publicly stated their support for diversity and Black Lives Matter. Researchers, however, have pointed out that this public support for social justice movements often does not lead to long-term structural change in hiring and retention policies of a diverse staff and leadership.

The current statistics are stark. The Deloitte Missing Pieces Report: The 2018 Board Diversity Census of Women and Minorities on Fortune 500 Boards found that out of 1,222 new board members of Fortune 100 companies, 77 percent were white.

“The lack of diversity on California’s boards and upper-level corporate positions is a challenge we urged corporations to address on their own during our time in the Legislature,” said Assemblymember Christina Garcia.

“However, it is clear we can no longer wait for corporations to figure it out on their own. By ensuring diversity on their boards, we know the corporations are more likely to both create opportunities for people of color and give them the support to thrive within that corporation. I’m excited this bill is signed and look forward to California continuing to lead the way in our fight for racial equity in general,” Garcia said.

“This measure recognizes that including the perspectives of underrepresented groups in leadership roles will result in more innovation, improved productivity, and better economic outcomes,” said Assemblymember David Chiu, chair of the Asian Pacific Islander Legislative Caucus.

“I applaud Gov. Newsom for signing this important bill to ensure corporate boards reflect the diversity of our state and are able to truly serve California’s diverse population,” said Chiu.