What About Other Types of Diversity That Are Lacking in the Boardroom?
Nasdaq adopted a new board diversity rule in August 2021 requiring greater diversity in the boardroom for companies listed on its exchange, with the focus of the new rule requiring increased representation and disclosure of board members who self-identify as a female, an underrepresented minority, or LGBTQ+. (Michael Nagle, Bloomberg Law; Securities and Exchange Commission). While these new requirements are a step in the right direction, there is a category of underrepresented individuals excluded from the existing diversity rules – people with disabilities.
During the open comment period leading up to the approval of the new Nasdaq rules, disability advocates encouraged Nasdaq to include people with disabilities in Nasdaq’s proposed list of diverse individuals that would meet the new board diversity requirements. (Lydia Beyoud and Andrew Ramonas, Bloomberg Law; Lannanh Nguyen and Daniela Sirtori-Cortina, Bloomberg Law). However, the disability advocates were unsuccessful on this front. Id.
According to a number of non-profit organizations that promote the inclusion of people with disabilities, there are approximately 1.3 billion people worldwide who are considered disabled and almost 33 million Americans who are of working age (over the age of 18) that are considered disabled. (Disability:IN, BusinessWire). A variety of non-profit groups and other organizations sought to convince Nasdaq and the Securities and Exchange Commission (“SEC”) to include people with disabilities in the new board diversity rules through a letter writing campaign that included letters from Disability:IN, the American Association of People with Disabilities (“AAPD”), the New York State Comptroller, the Leadership Conference on Civil and Human Rights, and others. Id. Additionally, a group of 30 asset managers have been vocal about encouraging those companies in which they invest to add more people with disabilities to their workforce. (Lydia Beyoud and Andrew Ramonas, Bloomberg Law). Yet, their voices did not sway Nasdaq to change its proposed rules to include people with disabilities as a qualifying characteristic to meet the new diversity rule requirements.
Nasdaq explained that it could be cumbersome to include too many categories of what qualifies as a diverse board member. (Lydia Beyoud and Andrew Ramonas, Bloomberg Law). In particular, Nasdaq indicated that too many categories of what constitutes diversity could result in “inconsistent and noncomparable data across companies.” Id. The Chairman of the AAPD stated that “Including disability diversity in the corporate boardroom would [have] mark[ed] a major turning point for disability rights and ha[d] the single largest impact on the economic independence and quality of life for millions of people with disabilities.” (Lannanh Nguyen and Daniela Sirtori-Cortina, Bloomberg Law).
Even so, Nasdaq’s website states that companies can choose to voluntarily disclose other diversity characteristics of board members, such as veteran or disability status, but these disclosures are not required. (Nasdaq). Further, these types of voluntary disclosures are not permitted to be included in the Board Diversity Matrix that listed companies must utilize to comply with the new board diversity rules. Id. As a result, these types of voluntary disclosures can only be noted outside the Board Diversity Matrix and may be more easily missed by investors evaluating a particular company’s board composition. Id.
As a result, people with disabilities are disadvantaged in corporate inclusion measures, leaving them to rely on the Americans with Disabilities Act (“ADA”), the only other prominent disability law protecting people with disabilities. While the ADA guarantees persons with disabilities protections in areas such as public transportation and building design and access, it does not guarantee that those same people be included in corporate boardrooms. (OnBoard Meetings, OnBoard). One commentator noted that people with disabilities have “been subjected to a history of unequal treatment and marginalization” and this groups “exclusion from all levels of corporate America is what makes people with disabilities such crucial assets to corporate boards.” (Ted Kennedy Jr., Fortune).
Even though Nasdaq did not include people with disabilities in its list of individuals that are considered to be diverse under its new diversity rule requirements, other groups are continuing to push forward and advocate on this front, and it appears that the SEC has heard their call. (Lydia Beyoud and Andrew Ramonas, Bloomberg Law). The SEC is considering its own board diversity rules and Commissioner Lee noted that “there’s merit to counting individuals with disabilities as diverse members of the boards, as women and ethnic minorities often are.” Id. Commissioner Lee further stated that while it may be difficult to analyze this issue, it “does seem to [Commissioner Lee] potentially that disability is a group that makes a lot of sense to include” in SEC’s board diversity requirements. (Lydia Beyoud and Andrew Ramonas, Bloomberg Law). The SEC has not released its proposed board diversity rules and it remains to be seen whether the SEC will fill Nasdaq’s void and recognize that people with disabilities, who have been historically marginalized, should be included in the boardroom and within the definition of diversity.