Local Assemblymember’s Bill Requiring Diversity on Corporate Boards Passes Senate Floor

A bill co-authored and promoted by Pasadena-area Assemblymember Chris Holden that requires diversity on corporate boards in California passed the Senate Floor on Saturday.

The legislation, AB 979, requires publicly held corporations headquartered in California to have at least one director from an underrepresented community by the close of 2021.

“Corporations have money, power, and influence,” said Assemblymember Chris Holden. “If we are going to address racial injustice and inequity in our society, it’s imperative that corporate boards reflect the diversity of our State. One great benefit of this action – corporations with ethnically diverse boards have shown to outperform those that lack diversity.”

The bill is jointly authored by Assemblymembers Holden, Cristina Garcia, and David Chiu, with Eloise Gomez Reyes as principal co-author.

Holden said that soon after the social unrest following the killing of George Floyd, many corporations publicly stated their support for diversity and Black lives. Critics, 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 quite stark,” according to a statement by Holden, which goes on to say that the Harvard Law School 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% were white.

 “Corporations have money, power and influence,” Holden, a Democrat, said. “If we are going to address racial injustice and inequity in our society, it’s imperative that corporate boards reflect the diversity of our state.”

“One great benefit of this action – corporations with 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.