PRO

Sunny Li

SB 826 addresses a pressing issue: the lack of women on company boards. It is both necessary and effective in promoting diversity in companies, as well as a step toward the larger goal of female representation.

Studies show that there is still a severe lack of women on company boards, necessitating SB 826’s implementation. Board Governance Research LLC, a research firm focused on corporate board practices, conducted an analysis in 2017 that revealed about one fourth of companies based in California had no women on their boards. This indicates that women are underrepresented in companies’ leadership: women may make up about half of California’s population, but they do not have a voice in making many of the decisions that may affect them.

Due to instances in which women may be discriminated against, such as the hiring process, the bill is necessary to help qualified women earn leadership roles in companies. Employers may not be actively trying to exclude women, but could be unconsciously drawing on deeply ingrained stereotypes. For example, employers may not promote women because they do not pay as much attention to their progress due to biases against hem. SB 826 would allow for the conscious inclusion of women.

Though SB 826 would force companies to include more women on their boards, this change will actually benefit the companies. According to a 2013 Thomson Reuters analysis, companies with no women on their boards had worse returns when compared to the Morgan Stanley Capital International, an index used to measure equity performance in global markets. Companies will realize, based on their returns, they will grow as businesses through inclusion and will be encouraged to take action beyond what is required.

Moreover, the quota system requiring companies to have a certain number of female board members has been proven to be effective in many European countries, including Norway, France and Italy. When Norway passed a law in 2003 requiring companies to have boards that are at least 40 percent female, the quota was met by 2008. In addition, concerns of appointing unqualified women are unfounded. A 2014 study by Marianne Bertrand of University of Chicago analyzing the effects of that quota in Norway shows that the average qualifications of women on company boards actually increased after the quota was implemented.

SB 826 sends a strong message to companies, as well as to ordinary people, regarding the importance of gender diversity in leadership roles in the workplace. Whether it will be implemented successfully remains to be seen, but the idea is clear: women should be valued and represented as leaders in the workplace.