Goldman Sachs has scrapped an internal diversity rule that required companies to have at least two diverse board members, one of whom had to be a woman, before the bank would advise on their stock market flotation.
Vice Chair Richard Gnodde stated that the policy, introduced in 2020, had “served its purpose” by encouraging businesses to embrace diversity.
“That policy was put in place to try and drive a change in behaviour and I think that’s happened,” he told the BBC.
The investment bank’s policy initially required one diverse board member before being expanded to two. The decision to remove the rule follows a US federal court ruling in December that overturned Nasdaq’s requirement for companies to disclose board diversity information. Goldman Sachs stated that despite ending the formal policy, it remains committed to promoting diverse leadership.
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A Goldman Sachs statement says, “As a result of legal developments related to board diversity requirements, we ended our formal board diversity policy. We continue to believe that successful boards benefit from diverse backgrounds and perspectives, and we will encourage them to take this approach.”
Slowdown in Board Diversity Progress
Goldman Sachs’ decision comes amid increasing pressure on private companies to scale back diversity, equity, and inclusion (DEI) initiatives following the election of Donald Trump as US President. The White House has been pushing businesses to end DEI policies, with recent executive orders requiring federal employees to report colleagues promoting DEI efforts.
While these orders do not apply to private firms, the US attorney general has been asked to explore ways to extend them to the private sector.
Think tank The Conference Board reported that US boards are “more diverse than ever”, but noted a slowdown in racial diversity hiring between 2022 and 2024. Among the 500 largest US firms, 26 percent of board members were non-white, and 34 percent were women in 2024. Despite progress, concerns remain over the pace of change.
