Goldman Sachs has announced the elimination of an internal diversity policy that previously restricted its ability to advise all-male, all-white boards on public offerings. Richard Gnodde, the bank’s vice chair, explained that the decision was made because the policy had successfully fulfilled its intended purpose.
Initially implemented in 2020, the diversity requirement mandated that companies seeking to float their shares needed to have at least one diverse board member, later increasing the requirement to two. In a comprehensive interview, Gnodde remarked,
“That policy was put in place to try and drive a change in behaviour and I think that’s happened.”
Shifts in board diversity and legal implications
According to The Conference Board, a think tank focused on corporate governance, while U.S. boards are now more diverse than ever, there has been a notable slowdown in racial diversity hiring from 2022 to 2024. As of 2024, 26% of directors at the largest 500 U.S. firms are non-white, while women comprise 34% of board members.
Legal challenges have also impacted diversity policies. A recent ruling by a U.S. federal appeals court determined that Nasdaq does not have the authority to enforce rules requiring board diversity or to mandate explanations from companies failing to meet such criteria. Following these developments, a Goldman Sachs spokesperson confirmed,
“As a result of legal developments related to board diversity requirements, we ended our formal board diversity policy.”
Calls for UK infrastructure investment
In addition to discussing board diversity, Gnodde emphasized the necessity for the UK government to expedite infrastructure projects. He noted recent endorsements from Chancellor Rachel Reeves for significant expansions, including a third runway at Heathrow and improvements to transportation networks. However, Gnodde expressed concern that these projects could take years to complete.
He urged the government to initiate infrastructure projects that are ready for implementation, stating,
“Let’s find some infrastructure builds that we need to do, whether it’s in the energy sector, whether it’s in transportation.”
Gnodde believes that the Treasury should expedite the process by inviting bids from the private sector, fostering competition and encouraging economic growth.
In a recent report on enhancing small businesses in Britain, Goldman Sachs highlighted the need for urgent growth initiatives, recognizing it as a pressing national mission. Gnodde’s remarks suggest a strategic push towards consolidating businesses in the UK to boost global competitiveness. He asked,
“How many of these players do we need? I think the market should be able to drive that if we’re going to compete on the global stage.”