Corporate Board Diversity is an expression used to describe the broad variety of demographic characteristics, characteristics and abilities within the boardroom. This could include gender, age education qualifications, professional experience as well as philosophies, cultural identities such as race, sexual orientation and religion. This diversity can provide an array of perspectives and capabilities that serve the business needs and future needs of the business.

A well-functioning board is essential to a successful business This is the reason why the composition of a board should be designed to support this objective. Diversity is a way the board can attain this goal through fostering different ways of thinking, leadership and emotional styles that help to increase awareness of risk.

As such investors are now demanding that their companies have an inclusive board. Some large institutional investment firms are actively removing board members who don’t comply with their standards of gender and racial equity. CalPERS, the pension fund for state workers issued letters in the month of August 2017 to 504 companies that are listed on Russell 3000, demanding that they come up with and implement a strategy for diversity.

Certain states also adopt regulations that force companies to adopt measures to ensure board diversity. California, for example, requires that public corporations headquartered in the state must have at a minimum a certain number of female directors and directors from minorities that are underrepresented on their boards by 2021. Companies are also legally required to disclose the ethnic and racial diversity of their board.

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