Goldman Sachs, one of Wall Street’s leading investment banks, has recently announced the termination of its policy requiring companies to have diverse boards for the bank to underwrite their initial public offerings (IPOs).
This decision comes amid increasing legal challenges and political scrutiny surrounding corporate diversity, equity, and inclusion (DEI) initiatives.
In 2020, Goldman Sachs introduced a policy mandating that companies seeking to go public in the U.S. and Western Europe must have at least one diverse board member.
This requirement was strengthened in 2021, requiring companies to have at least two diverse directors, one of whom had to be a woman.
The policy aimed to promote diversity in corporate leadership and encourage businesses to adopt more inclusive hiring and governance practices.
Legal Challenges and Policy Reversal at Goldman Sachs
The decision to drop the diversity requirement follows a U.S. court ruling that struck down Nasdaq’s rule mandating companies disclose board diversity data and maintain diverse boards.
Goldman Sachs cited these legal developments as the reason for ending its formal board diversity policy.
Tony Fratto, a spokesperson for Goldman Sachs, stated, “As a result of legal developments related to board diversity requirements, we ended our formal board diversity policy”.
Goldman Sachs’ move is part of a broader trend of corporate DEI policy adjustments, especially following the election of President Donald Trump, whose administration has been more skeptical of diversity mandates.
Many firms are reassessing their DEI commitments due to increasing legal challenges and political opposition.
Ongoing DEI Commitments
Despite reversal, the company maintains that diverse boards are beneficial for corporate governance and performance.
The bank will continue to encourage, but not require, diversity in boardrooms.
Goldman Sachs has a dedicated team focused on helping companies identify and recruit diverse board members and remains committed to fostering inclusive corporate leadership.
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