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Illustration by Joren Cullen

More than 3,100 companies trade on the National Association of Securities Dealers Automated Quotations exchange – Nasdaq. They run the gamut from tech giants like Apple, Amazon and Microsoft to little-known pharmaceutical and clean energy start-ups. So any move by Nasdaq to enhance the governance of its listings has the potential to ripple through a wide swath of corporate America and beyond.

The exchange took a step in that direction in December with a proposal that at least two members of most listed companies’ boards cannot be straight white men. Small boards with five or fewer members will be allowed to have just one “diverse” director.

The move has drawn praise from the American Civil Liberties Union – hardly known as a friend of big business. “By pushing its listed companies to address racial and gender equity in corporate boards, Nasdaq is heeding the call of the moment,” said Anthony Romero, the ACLU’s executive director. “Incremental change and window-dressing isn’t going to cut it anymore as consumers, stakeholders and the government increasingly hold corporate America’s feet to the fire.”

Critics accuse Nasdaq of trying to set quotas for corporate boards, but the exchange has noted that more than two dozen studies have found links between diverse boards and improved financial performance and corporate governance.

Under the proposal, all Nasdaq-listed companies will have between two and five years to comply with the new rules, or explain in writing why they have not. The Securities and Exchange Commission is set to rule on the proposal this summer.

Quartz estimates that the move will add at least 570 women to corporate boards, plus at least the same number who identify as Black, Hispanic, Asian, Indigenous, LGBTQ or other minorities.

Welcome as Nasdaq’s move is, it is not the first – nor the most aggressive – push for boardroom diversity. California passed one law in 2018 and another last year stipulating that, among other requirements, companies with nine or more directors must include at least three from under-represented groups. Goldman Sachs, a Wall Street powerhouse, said last July that it would take a company public only if the board includes at least one woman or member of a racial minority.

Such initiatives are bearing fruit. A record number of women took the reins of Fortune 500 companies last year, including at UPS, Clorox, Gap and Citigroup. Forty-one Fortune 500 companies now have female CEOs, up from 24 in 2018 and just two at the start of the millennium. The ball may be rolling more slowly than many would like. But at least it is rolling – and in the right direction.


Vanguard Group and Fidelity Investments are not putting their climate-change mouths where their money is.

The two asset-management giants, which together manage close to US$10 trillion, clearly recognize the benefit of investing in companies with strong environmental records. Fidelity’s vast stable of mutual funds, for example, includes a water sustainability fund centred on new technologies to improve the availability of safe and affordable water.

“Investors are increasingly seeking to meet their financial goals while contributing to positive social and environmental outcomes,” Fidelity proclaims in its promotional material. “As stewards of our clients’ capital, we endeavour to satisfy these aspirations.”

One may be forgiven, however, for wondering whether these endeavours amount to much. Neither Vanguard nor Fidelity Investments signed a pledge by 30 mostly European money managers last December to invest only in companies with net-zero carbon dioxide emissions by 2050. (One signatory is Fidelity International, which was spun off in the 1980s.) Nor have they joined Climate Action 100+, a five-year global initiative by 400 investors to prod the largest corporate greenhouse-gas emitters to mend their ways.

InfluenceMap, a London-based climate-action advocacy group, notes in its latest Asset Managers and Climate Change report that the two firms lag their main U.S. rivals, BlackRock and State Street Global Advisors: “Their transparency on the climate engagement process is poor with minimal references to transitioning companies in line with Paris goals or governance of lobbying practices.”

Fidelity was the worst performer of 30 groups assessed by InfluenceMap in 2020, prompting the rebuke that it “continues to show limited to no evidence of engaging on climate.”

In contrast to the water sustainability fund, the report singles out Fidelity’s Contrafund as “particularly misaligned” with the goals of the Paris Agreement, given the fund’s holdings in oil production and the lack of investment in electric vehicle technology.

Vanguard supported just 21% and Fidelity 23% of all climate-related shareholder resolutions that they voted on during the 2020 proxy season. Together with Los Angeles–based Capital Group, they opposed every resolution related to climate policy lobbying – as they had in the previous two years. By contrast, most leading European asset managers backed the vast majority of such resolutions.

As InfluenceMap puts it, “The lack of support from the world’s largest asset managers on resolutions relating to lobbying, energy transition plans, and other key climate issues remains a barrier for forceful stewardship by investors on the climate emergency.”

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