Starbucks chair says lack of boardroom diversity is "corporate suicide"
Companies in the U.S. that fail to add people of color to their leadership are "committing corporate suicide," the chairwoman of Starbucks said this week.
Mellody Hobson said in a virtual talk at Maine's Bowdoin College that "it's time for us to start acting and doing something" to broaden the racial and gender composition of boards of directors that help guide big companies. Although the diversity of Fortune 500 boardrooms has increased in recent years, research shows that most boards remain overwhelmingly white and male.
"You can't be a leading company in the world and not have a diverse board or have a real agenda around diversity without at some point dying as an organization," Hobson said Wednesday. "Now it may take a while, but I do think it will be inevitable."
Hobson assumed her role as board chair at Starbucks in March. Almost half of Starbucks' 11-member board is composed of people of color.
Beyond Starbucks, more than 80% of Fortune 500 board seats belong to White Americans, according to Society for Human Resource Management data published in January. People of color held 13% of board seats at Russell 3000 companies in 2019.
To boost those numbers, companies "need less talk and more elbow grease on these issues," Hobson said.
Some prominent corporations have sought to diversify their boards in recent years. Companies such as Nike, Salesforce and Aflac now each boast at least two board members of color. But the murder of George Floyd and its impact on race relations in the U.S. has heightened scrutiny on the racial makeup of decision-makers at large companies.
For example, California passed a new law last year mandating that publicly traded companies based in the state must have at least one board member of color. Similar legislation has been proposed in Massachusetts.
In the private sector, Goldman Sachs said it will not help take a company public if its board is all-White. Meanwhile. Nasdaq is also pushing for a new rule that requires companies listed on the tech-heavy exchange to have at least one person of color on the board, or explain to the Securities and Exchange Commission explaining why they don't.
Nasdaq CEO Adena Friedman said in December that adding the rule would give the public confidence that companies they're investing in are serious about diversity.
"We believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America," Friedman said.