Since a precedent-setting California law mandating gender diversity on corporate boards passed in 2018, the number of women on boards has more than doubled from 766 to 1,844, and more women than men were named to boards of publicly traded companies based in the state in 2021, according to a report released this week.
More than half, 50.4%, of new board members that started at publicly traded companies in the state this year were women, bringing the seats held by women to almost 30%, up from 15.5% in 2018, a report by California Partners Project said.
“All-male boards are essentially a thing of the past among California’s public companies — and that gives us a competitive edge,” Jennifer Siebel Newsom said in a statement. She is co-founder of California Partners Project, a group that advocates for gender diversity, and is married to California Gov. Gavin Newsom.
In 2018, then-California Gov. Jerry Brown signed Senate Bill 826 into law. It required one woman on boards of public companies by the end of 2019, and by the end of 2021, companies were mandated to have at least one woman if the board has four or fewer directors, two if the board has five directors and three if the board has six or more directors.
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According to the report, though, some of the 752 publicly traded companies subject to the law have some work to do before the end of the year for compliance: While 54.4% of companies have met the requirements, 33.4% must add a woman by the end of the year, while 12.2% must add two or more. That amounts to at least 440 more board seats that need to be filled with women by the end of the year, the report said.
The industry that has the most gender-diverse boards in the state is energy and utilities, with 36% of board seats held by women. That’s followed by the retail and entertainment industries with 33% each, and technology with 31%. Agriculture had the lowest percentage of seats held by women, with 24%.
The law calls for a $100,000 fine for noncompliance for the first violation, and more for subsequent violations. But in court earlier this month for a lawsuit challenging the law’s constitutionality, the Associated Press reported that a deputy attorney general said the secretary of state’s office, which is responsible for enforcing the law, would not fine companies that don’t comply.
Joe Kocurek, press secretary for Secretary of State Shirley Weber, said Thursday that because the issue is before the court, the office would not comment.
The lawsuit was brought by conservative legal group Judicial Watch, which alleges the law violates the equal protection clause of California’s constitution. Last month, another conservative legal group, Pacific Legal Foundation, filed suit over another state law that mandates representation of members of underrepresented racial or LGBTQ groups on corporate boards, which was signed into law by Gov. Newsom last year. That group alleges Assembly Bill 979 “perpetuates” discrimination.
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“The most interesting aspects of these same or very similar suits is that not a single California company has stepped forward as a plaintiff to challenge the requirements that they add diversity to their boards,” former State Sen. Hannah-Beth Jackson told MarketWatch. “These suits reflect the desperation of the far-right to perpetuate discrimination that undermines the economic and corporate success that occurs as a result of legislation that opens up opportunity for all.”
Legal challenges over these issues go beyond California. The Securities and Exchange Commission is facing a lawsuit filed in October targeting its approval last summer of a Nasdaq rule about diversity on boards. The stock exchange’s listing rules require diversity disclosures for companies’ boards.
California Partners Project’s data includes information about 525 companies in the Russell 3000 Index, plus 227 publicly traded companies also subject to the state’s board gender-diversity law, as of Sept. 30. The group last provided an update on the numbers in May.