Some may feel that 2018 was a disruptive year in the boardroom with issues like digital transformation and strong investor pressure on diversity. A quick glance at the 2019 horizon, however, may suggest that 2019 could be the most disruptive year since Dodd-Frank…
ESG, the proposed Accountable Capitalism Act, state-issued board diversity quotas, and continued pressure from institutional investors—these things will continue to shape board discussions and composition in 2019. In this episode, we welcome back Doug Chia, Executive Director of The Conference Board Governance Center, to discuss how some of these issues may play out.
“I know in the United States people really have a bad reaction to [California’s gender diversity law], but this demonstrates that if corporations don’t start to really deal with this issue and try and promote more women on boards by themselves, government will start to take over. California will be an interesting experiment.”
Chia and Host TK Kerstetter discuss what boards can expect following California’s board diversity quota for women. What are the positive and negative ramifications of this legislation? Can we expect more states to follow suit?
Further, the two tackle Senator Warren’s proposed Accountable Capitalism Act, which not only proposes federal chartering, but that a portion of the board be elected by employees. How would the suggested legislation restructure corporate formation and corporate law in the U.S.?
“[The proposed legislation] would dilute the institutional investors’ ownership and voting power by 40% overnight…,” Chia pointed out. “To me, it’s a concept piece: ‘Here’s where I, Elizabeth Warren, think we need to go.’ It’s a very populist message…But I think it’s also one of those wake-up calls to corporations that we knew would eventually come.”
Kerstetter and Chia also discuss CalPERS’ recent leadership change, as well as how they see the focusing on ESG evolving in 2019.