In October 2018, SB 826 was enacted. The legislation mandated that public companies headquartered in California have at least one woman on their boards by the end of 2019, and a minimum of three women on boards of six directors or more by 2022. However, one group of women is being left out of the equation as companies work to fill their boards. The Latino Corporate Directors Association (LCDA) announced that after reviewing data of women appointed to California public company boards, they discovered Latinas make up only 3.3% of women appointed since SB 826 was enacted.
According to the LCDA’s analysis, of the 511 seats filled by women since the law was passed, only 17 were filled by Latinas — the smallest number of any minority. The omission is even more glaring, as California is a state with a more than a 39% Latinx population.
White women make up the largest number of new appointments at nearly 80%. Asian women make up 11.5% and Black women make up 5.3%.
According to the U.S. Census Bureau, California is 72.1% white, 6.5% Black, 15.3% Asian, 1.6% American Indian or Alaska Native, 0.5% Native Hawaiian or other Pacific Islander and 3.9% mixed race. It is important to note that Hispanic/Latinx is an ethnic identification, and not a race. People of many racial backgrounds may identify as Hispanic or Latinx. Nearly 37% of the white population in California does not identify as Hispanic or Latinx.
California LCDA Member and Former Secretary of the U.S. Small Business Administration (SBA) Maria Contreras-Sweet said in a press release that companies’ attempts to promote more women to their boards are half-baked and lacking diversity.
“Collecting resumes, without a commitment to diversity, will not change the color of California boardrooms,” she said. “It’s past time that Latinas had a seat at the table. There is an ample supply of qualified and experienced Latina directors and C-level Latinas from an array of industry sectors. Companies must be committed to diversifying their boardrooms.”
Diversity is more than just a moral or social issue — Companies with more ethnically and culturally diverse boards of directors earn above-average profits, according to a McKinsey study.
“There is a strong correlation between diversity and corporate performance,” Contreras-Sweet said in the press release.
When it comes specifically to women of color, they only make up 4.6% of Fortune 500 board seats according to Catalyst data.
In response to the lack of Latinas on boards in California, the LCDA is calling for companies to be transparent in disclosing demographic info to the U.S. Securities and Exchange Commission (SEC) so that shareholders can make informed decisions about the companies in which they invest. These disclosures would include information on gender, race and ethnicity of board members.
Due to the lack of regulatory disclosures from companies on the diversity of their boards, the LCDA created the Latino Board Tracker, a database of Fortune 1,000 California-headquartered corporations and the Latinx makeup of their boards. Latinas hold 1.1% of these seats — Less than the women of any other ethnic group.
The LCDA seeks to make this transparency law, especially because the Latinx population in California is growing faster than any other ethnic population. Latinx people are estimated to make up half of all Californians by 2060.
Those failing to put Latinas in power are missing out on opportunities to connect with a large chunk of the population.
“California companies that fail to reflect this growing demographic in their boardrooms risk falling behind on building a board that is well-positioned to address a future where 25% of their workforce and customer base will be Latina,” the LCDA analysis said.