Goldman Sachs CEO pushes for more diversity on boards

Goldman Sachs won’t take companies public unless they have at least one “diverse” board member, said the bank’s CEO David Solomon in an interview with CNBC at the World Economic Forum in Davos, earlier today.

Goldman’s push for more diversity on boards will primarily be focused on women, and the rule will apply for companies in the US and Europe from 1st July 2020. By 2021, the bank will look for two diverse board members, Solomon added.

DIVERSE LEADERSHIP = BETTER PERFORMANCE

Over the past four years, initial public offerings of companies in the US with at least one female director on their boards performed “significantly better” compared to those without, Solomon confirmed. Proof that ‘diverse leadership leads to better performance’.

In the last two years, more than 60 companies went public in the US and Europe without a diverse board member, Solomon pointed out in his LinkedIn post this evening. Part of this has to do with the simple fact that the pool of candidates has “traditionally been focused on those with CEO or CFO or other board experience”, he said. “As the corporate world has been painfully slow in moving on promoting talented people of diverse backgrounds, this has impeded the opportunity set for many individuals with decades of experience and important skills that could help companies make better decisions, driving enhanced returns for their shareholders.”

SMALL STEP IN THE RIGHT DIRECTION

Solomon hopes to change that with the decision made today. “We realise, it’s a small step, but it’s in the right direction. We think it’s the right advice and because of our network, we’re also in a position to help our clients if they need help placing women on boards,” Solomon said on CNBC.

“From a governance perspective diversity on boards is a very important issue and we are very focused on it,” he added. Four out of 11 directors on Goldman Sachs’ Board are female and its Lead Director is Black, he confirmed.

D&I has been a priority for Solomon since he took up the role of CEO at Goldman Sachs in October 2018. Last year, Solomon wrote to staff outlining his plan to hire more women and minorities, and has since improved wellness benefits for the bank’s employees globally.