Well, it wasn’t said quite like that. But the message coming from Davos, Switzerland, yesterday was loud and clear: Goldman Sachs will no longer help companies go public unless there is some modicum of diversity on their boards of directors.
“Starting on July 1 in the U.S. and Europe, we’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women,” Goldman Sachs CEO David Solomon said on CNBC’s “Squawk Box” during the World Economic Forum in Davos. “And we’re going to move toward 2021 requesting two.”
So why would this investment banking titan, whose alums include former U.S. Treasury secretaries Robert Rubin, Hank Paulson and Steve Mnuchin — not to mention other political headliners like Rahm Emmanuel, Jon Corzine and Steve Bannon — announce such a change?
Forget your assumptions that Goldman Sachs did this out of political correctness or in an attempt to make a moral or ethical stand.
There is plenty of evidence that suggests having a more diverse board of directors and C-suite results in better all-around performance in the long term.
Aflac’s CEO Dan Amos summed it up best two years ago. One of his most frequent sayings is that he already knows what a 60-year-old white man thinks, so there is no reason to surround himself with other 60-year-old white men. As CEO of Aflac since 1990, Amos has been on the record saying that he is determined to build a diverse set of leaders at the table whenever critical decisions about the company’s strategy and future are being made.
Nevertheless, despite the data suggesting that more women are serving on corporate boards in the U.S., there is no shortage of critics who say many companies are still moving at a glacial pace when it comes to diversity.
To date, one can argue that Goldman Sachs is putting its money where its mouth is. The 11 members of Goldman's board of directors include four women, and it has said in recent disclosures that it is on course to hire more women, as well as racial and ethnic minorities. Last year, Solomon said the company would require half of the new junior bankers hired to be women.
Some may insist this announcement is more of a splashy marketing or public relations move. Connie Loizos of TechCrunch, however, best articulated the reality facing corporate America and the banking giants that finance them: “Some of the biggest banks in the United States are among the most powerful institutions in the world. But like every incumbent, they still have to hustle to stay relevant.”
Image credit: Robert Bye/Unsplash
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.