It is impossible to ignore the protests and social justice initiatives surrounding the Black Lives Matter movement spanning the country, recently surpassing 100 consecutive days of protests. (Patience Womack & Tosca Ruotolo, The Daily Barometer). In light of national demands for racial justice, the California state legislature introduced Assembly Bill 979 (“Diversity Bill”) aimed at increasing corporate diversity. In short, the Diversity Bill requires corporations that have nine or more Board of Directors to include at least three minority members by the end of 2022. (Saijel Kishan, Bloomberg). Additionally, California’s Secretary of State will be required to publish annual board diversity reports evaluating corporate progress and compliance. Id. In 2018, California enacted a similar gender equity law, S.B. 826, 2017-18 Gen. Assemb., Reg. Sess. (Ca. 2018), requiring publicly held companies with a board of four or less to have at least one female director. (Women on Boards, California Secretary of State). Though the 2018 bill is widely criticized, its results are undeniable, increasing representation and corporate accountability. (See generally California Secretary of State, March 2020 Women on Boards Report).

According to the Diversity Bill’s proposed text, “director from an underrepresented community” includes “an individual identifying as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” (A.B. 979, 2019-20 Gen. Assemb., Reg. Sess. (Ca. 2020)). While the Diversity Bill cites a number of startling racial disparity statistics, it notably calls out Silicon Valley and the California technology industry’s notorious lack of diversity; citing the fact that African American and Latino computer science and engineering majors from highly ranked universities graduate at twice the rate than the tech sector is hiring people of color. Id.

The timing of this groundbreaking Diversity Bill cannot be ignored, gaining traction amid the backdrop of national protests and public attention. However, the Diversity Bill’s timing is more than mere coincidence. Though the Diversity Bill was first read in the legislature on February 21, 2019, a significant six-month stall in its history between January and June of 2020 suggests a correlation between the public’s newfound attention to racial justice initiatives and the bill’s revival. Id. It also begs the question of whether other states will soon follow suit as was the case for California’s 2018 Women on Boards Law. For example, New York passed a “Women on Corporate Boards Study” law that took effect this past June, requiring both publicly traded and privately held companies to report executive demographics (Teri Wilford Wood, Anna K. Broccolo, Jackson Lewis, PC). Maryland and Illinois recently passed similar reporting requirements, the first of their kind in these states. Id.

John Rogers, Chair of the Black Corporate Directors Conference (BCDC) and co-CEO and Chief Investment Officer of Ariel Investment, stated that “the current social unrest in our country calls for proactive, vigilant leadership working toward achieving comprehensive and measurable results.” (Ben Maiden, IR Magazine). Therefore, if corporations are not willing to independently respond to the increasing public demand for racial equity, state legislatures will, and California’s Diversity Bill is evidence they already are.