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The chief executive of Goldman Sachs (GS) has said the bank won’t work on stock market listings of companies unless they have at least one “diverse” candidate on their boards.
“Starting on July 1 in the US 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,” David Solomon told CNBC in an interview at Davos on Thursday, “and we’re going to move towards 2021 requesting two.
“We realise this is a small step but it’s a step in the right direction.”
The move makes Goldman one of the first investment banks to mandate diversity among clients. Goldman itself was once viewed as the ultimate ‘old boys’ club’ — New York Magazine ran an article titled ‘The Head of Goldman Sachs Will Always Be Bald’ in 2011 — but the bank has worked to improve diversity in recent years.
“We have four women out of 11 [on the board], we have a black lead director,” Solomon said. “I really value the diverse perspectives I’m getting that are helping me run the company.”
Solomon said the move was not just about taking a stance on an issue but also good for business. He highlighted that initial public offerings (IPOs) of companies in the US with at least one woman on their board had performed better than those without over the last four years.
“We might miss some business but in the long run this is the best advice for companies that want to drive premium returns for their shareholders,” Solomon said.
Goldman will work with companies that lack board diversity to help them find people to put on their boards, Solomon said.
Over 60 companies across the US and Europe went public with no female board members over the last two years.
While Goldman’s pledge will likely be cheered, the fact that it is only demanding women on boards from US and European clients may open it up to some criticism. Asia has the worst record when it comes to diversity on boards, meaning Goldman could be accused of only mandating the target in areas where it is easy to meet.