Comparing Gender Diversity on Boards Across the United States

November 4, 2020

Brielle Ferdinand

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According to the Q2 2020 Equilar Gender Diversity Index (GDI), by the second half of 2020, women occupied almost 23% of Russell 3000 board seats. During Q2 2020, the GDI reached 0.46, the highest point since its inception, where 1.0 represents parity amongst men and women. With gender diversity rising nationwide, some states are closer to reaching equal representation than others. The table below depicts where each U.S. state stacks up.

Table 1

New Mexico still has the highest representation of women on boards at 40%, with Rhode Island and Maine both falling into the next spot at 30%. Similar to Q1 2020, the states topping this list tend to hold fewer Russell 3000 corporate headquarters. However, states like California, Illinois and Texas that are home to over 100 companies are moving in the right direction with an increase in the share of board seats occupied by women.

The largest percent change from Q1 to Q2 goes to Montana, with a 47% increase in female representation. Only four other states achieved double digit increases. Following the trend in overall representation, the states with the highest percent increase contained no more than 40 Russell 3000 companies. However, 36 states saw an increase in female representation from Q1 to Q2, which means the nation as a whole is still moving toward gender parity.

Several states have tried to speed up the process with legislation, especially following the success of California’s mandate for gender diversity that went into effect in 2018. Washington recently followed suit with similar legislation, mandating either "gender-diverse boards" (composed of at least 25% women) by January 1, 2022 or compliance with specific diversity disclosure requirements. Illinois and Maryland both passed laws in 2019 requiring more disclosure surrounding board diversity data and both states saw an increase in gender diversity on boards from Q1 to Q2. New York lawmakers launched a study on female directors under a law that took effect just this last June and several other states have proposals underway regarding board diversity - either requiring or encouraging it.

Recently, a new bill was signed in California, the first of its kind to require boards in the state to have directors from under-represented communities, in an effort to expand board diversity from gender to include ethnicity and sexual orientation. Considering the effectiveness of the gender quota for public boards in the state, pushing the share of Russell 3000 board seats belonging to women from 17% when the legislation was passed to 24% as of earlier this year, it is expected that we will see a similar rise in the share of board seats belonging to members of under-represented communities. According to Equilar an analysis, the current share of board seats occupied by people of color in the state of California sits at just around 13%, despite the fact that they make up almost 64% of the state population.

While actual diversity requirements and quotas may seem like a simple approach to incite change, disclosures and reporting give way to better, more accurate tracking of statistics and trends that can cause important shifts in diversity, nomination processes and board management overall. The indirect approach to encouraging board diversity also gives shareholders and consumers better insight into a corporation’s decision-making process and values than a direct approach that simply requires change.

In light of recent national events, diversity has come to the forefront of many corporate conversations, putting more pressure on companies to analyze the diversity throughout their organizations, especially at the top. If this leads to more concentrated efforts from companies themselves, legislation may cease to play as large of a role in the diversification of Russell 3000 boards. Until then, states with legislation will likely see more representation and diversity of thought in board rooms, and in turn, higher-performing companies.

The Equilar Diversity Network is a consortium to advance diverse representation in boardrooms across the globe. The Network is accessible exclusively through the Equilar BoardEdge platform and is the “registry of registries” of board-ready executives from leading ethnic and gender diversity organizations. Learn more at https://www.equilar.com/diversity.

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