Diversity reporting: A new normal for listed companies?

Something is changing in the stock market. Last month the U.S. Securities and Exchange Commission (SEC) has approved Nasdaq’s gender and diversity rules for companies listed on the exchange, and Singapore Exchange Regulation (SGX RegCo) sought feedback on their proposals to mandate issuers having in place a board diversity policy and to disclose in their ARs. 

Nasdaq will require companies to have at least two diverse directors; one who identifies as female and one as an underrepresented minority or LGBTQ+. If companies don’t meet the requirements, they will have to explain why. 

Companies will also be required to release diversity statistics about their boards, which “will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity”, SEC chair Gary Gensler said. In a study conducted in 2020, Nasdaq found that more than 75% of its listed companies wouldn’t have met its proposed requirements. 

Singapore Exchange Regulation (SGX RegCo) is seeking feedback on proposals to mandate issuers having in place a board diversity policy and to disclose in their ARs: 

  • A board diversity policy including targets, accompanying plans, and timeline for achieving the stipulated diversity on its board. 
  • A description of how the combination of skills, talents, experience, and diversity of directors in the board serves the needs and plans of the issuers. 

SGX RegCo is also proposing that issuers be required to adopt these enhancements for financial years beginning on or after 1 January 2022. The public consultations are open until 27 September 2021. 

With Nasdaq and SGX’s proposals on diversity reporting, we are seeing an increased focus on diversity. Denominator welcome these initiatives, as they will strengthen DEI transparency. We will closely follow and review the processes.  

Do you believe available board diversity data is currently sufficient? Denominator has the world’s largest diversity data on the executive leadership and at the company level, which allows investors and other interested stakeholders to understand global companies’ approach to diversity both inside and outside their boards. 

If you are interested in learning more about Denominator and our data, please contact us by sending an email to info@denominator.one  

You can read more about diversity on boards in different counties in our article Improving Women on Boards: Voluntary measures or quotas? Here we outline the two different approaches and what consequences they have.