Goldman’s asset management arm takes a strong stand on diversity on corporate boards

Goldman Sachs has said its asset management business will vote against large companies that do not have a minimum number of female and minority board members starting next year, in a move that could affect thousands of businesses.

Starting in March 2022, Goldman Sachs Asset Management will require companies around the world to have at least two women on any board with more than 10 directors. Its policy currently requires a female director.

For S&P 500 and FTSE 100 companies, the GSAM will also require at least one director to be from an under-represented minority group.

For companies that do not comply, GSAM will vote against the members of the nomination committees of the board of directors. In the United States, he will vote against all board members if the company does not have female directors.

The stricter standards could affect around 2,500 companies globally if they don’t take action to add women to their boards by March, GSAM said. Currently, twelve companies in the S&P 500 do not meet the requirement to have a minority board member, he said.

With its new voting policy, GSAM is joining other asset managers and countries in pushing companies to do away with all-male boards.

RBC Global Asset Management said last year it would vote against all nominating or governance committee members at annual meetings of companies where women do not make up a quarter of the board.

France and Germany have established quotas for women on boards of directors. The Nasdaq stock exchange requires its listed companies to have two different directors, including a woman and an under-represented minority.

GSAM, which manages over $ 2 billion in assets, advocates for diversity on the board because it believes it will benefit shareholders, said Katie Koch, Co-Head of Core Equities Business .

“We believe diverse teams outperform,” she said. “[Diversity] is a very powerful tool for unlocking shareholder value.

In the third quarter of this year, 26.1% of Russell 3000’s directors were women, up from 25.2% in the second quarter, according to Equilar, a consultancy firm. He said 96 Russell 3000 councils did not have women, the first time there had been less than 100.

In January 2020, David Solomon, chief executive of Goldman Sachs, said the group would not take a U.S. or European company public unless the company has at least one diverse board member.