Nasdaq President Nelson Griggs
By Nelson Griggs
One of the silver linings of this difficult year has been a new commitment to creating systemic, sustainable change throughout our economy and in our communities. In the months since then, Nasdaq has been among a broad group of companies that have shifted the conversation from problems to solutions.
We have thought hard about how we can leverage our unique position as the marketplace for more than 3,300 publicly-listed companies – including many of America’s most innovative and fastest-growing – to scale up change. If we can bring better governance practices to all these companies, we can be a force multiplier.
Today, with the input from a broad group of market participants and the unanimous support of Nasdaq’s Board of Directors, Nasdaq is filing a proposal with the U.S. Securities and Exchange Commission that would set a standard for all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent and transparent diversity statistics regarding their board of directors. Our objective with this effort is that over a prescribed timeframe, all Nasdaq-listed companies have at least two board directors from diverse backgrounds.
Dozens of studies demonstrate that board diversity is positively associated with a company’s performance. Our proposal is more than a social good; it is a business imperative. We believe that while change must come at all levels of an organization, setting a standard for diversity at the board level is one of the most essential places to start.
This step toward building a more inclusive global economy follows Nasdaq’s history of leveling the playing field in financial markets. We were founded on the principle of driving access and transparency through technology. At a time when diversity was virtually non-existent on Wall Street, we built an exchange that allowed everyone to participate.
It also aligns with the important steps that other companies are taking: devoting resources to Historically Black Colleges and Universities, leveraging technology to diversify the talent pipeline, closely examining technology for indications of inherent bias, and increasing investments into underserved communities, just to name a few.
Our new listing rule proposal is a natural next step. If approved, it would require disclosure from listed companies on our U.S. exchange to have at least one director who self-identifies as female, and one who self-identifies as either an underrepresented minority or LGTBQ+. Depending on the type of company, we provide a window of between one and five years, with reasonable modifications based on company size and location, to comply with this new standard or explain why they do not. And, we will be providing listed companies with tools and resources to help them achieve this important goal.
We don’t submit this proposal as a complete solution to the systemic challenge of fairness and equity in our economy, and we expect it will lead to a robust dialogue. Indeed, as we’ve developed this proposal, we’ve heard from some who say it creates an unreasonable burden – and others who say it doesn’t go far enough. We respect these varying perspectives and look forward to building consensus. Most importantly, we approach this with a strong imperative for moving from conversation to action. By virtue of our role as facilitator of markets, we have an opportunity to catalyze and scale change, and we take that opportunity seriously.
Nasdaq believes that capitalism must be cooperative to be successful. We are encouraged to see so many companies and shareholders embrace the idea that diversity isn’t just a social imperative, it’s also core to their long-term success. We’re all in this together, and the time for action is now.
Nelson Griggs is President of the Nasdaq Stock Exchange