Gov. Jerry Brown has signed legislation authored by State Sen. Hannah Beth Jackson (D-Santa Barbara) to require gender diversity on corporate boards. The bill is a California Legislative Women’s Caucus priority.
Senate Bill 826 promotes equitable and diverse gender representation on corporate boards by requiring every publicly-held corporation in California to have a minimum of one woman on its board of directors by the end of 2019.
By the end of July 2021, the bill requires a minimum of two women on boards with five members and at least three women on boards with six or more. California will be the first state in the nation with such a requirement.
“With the governor’s support of SB 826 today, yet another glass ceiling is shattered, and women will finally have a seat at the table in corporate board rooms,” said Jackson.
“With numerous independent studies showing that corporations with women on their boards are more profitable, SB 826 is a giant step forward for women, our businesses and our economy,” she said.
In 2013, Senate Concurrent Resolution 62 (Jackson) urged that by 2017, each public company in California increase the number of women on their board to one, two or three, depending on the size of the board.
California was the first state in the U.S. to adopt this type of resolution, followed by at least five other states that have passed similar measures.
However, as of the Dec. 31, 2016, cut-off date, fewer than 20 percent of the Russell 3000 companies headquartered in California had the minimum number of women directors called for in the resolution.
Research has shown gender diversity on corporate boards is associated with increased profitability, performance, governance, innovation and opportunity. Yet, one-fourth of California’s publicly-held corporations have no women directors on their boards.
In this respect, California’s corporations are falling behind their global competitors with only 15.5 percent of board seats held by women, lower than the Fortune 1000 list at 19.8 percent.
A number of European nations have mandated gender diversity on corporate boards. In 2003, Norway mandated 40 percent of corporate board seats be held by women, which was followed by France and other European countries.
In 2015, Germany mandated 30 percent of corporate board seats be held by women.
As the fith largest economy in the world, California is well-positioned to take the lead on promoting gender equity in the workplace.
SB 826 is sponsored by the National Association of Women Business Owners, California.
Jackson represents the 19th Senate District, which includes all of Santa Barbara County and western Ventura County.
— Marly Young for State Sen. Hannah-Beth Jackson.