Improving Corporate Governance Through Diversity Act of 2019
Floor Speech
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Mr. GREEN of Texas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5084) to amend the Securities Exchange Act of 1934 to require the submission by issuers of data relating to diversity and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 5084
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Improving Corporate Governance Through Diversity Act of 2019''. SEC. 2. SUBMISSION OF DATA RELATING TO DIVERSITY BY ISSUERS.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at the end the following:
``(s) Submission of Data Relating to Diversity.--
``(1) Definitions.--In this subsection--
``(A) the term `executive officer' has the meaning given the term in section 230.501(f) of title 17, Code of Federal Regulations, as in effect on the date of enactment of this subsection; and
``(B) the term `veteran' has the meaning given the term in section 101 of title 38, United States Code.
``(2) Submission of disclosure.--Each issuer required to file an annual report under subsection (a) shall disclose in any proxy statement and any information statement relating to the election of directors filed with the Commission the following:
``(A) Data, based on voluntary self-identification, on the racial, ethnic, and gender composition of--
``(i) the board of directors of the issuer;
``(ii) nominees for the board of directors of the issuer; and
``(iii) the executive officers of the issuer.
``(B) The status of any member of the board of directors of the issuer, any nominee for the board of directors of the issuer, or any executive officer of the issuer, based on voluntary self-identification, as a veteran.
``(C) Whether the board of directors of the issuer, or any committee of that board of directors, has, as of the date on which the issuer makes a disclosure under this paragraph, adopted any policy, plan, or strategy to promote racial, ethnic, and gender diversity among--
``(i) the board of directors of the issuer;
``(ii) nominees for the board of directors of the issuer; or
``(iii) the executive officers of the issuer.
``(3) Alternative submission.--In any 1-year period in which an issuer required to file an annual report under subsection (a) does not file with the Commission a proxy statement relating to the election of directors or an information statement, the issuer shall disclose the information required under paragraph (2) in the first annual report of issuer that the issuer submits to the Commission after the end of that 1-year period.
``(4) Annual report.--Not later than 18 months after the date of the enactment of this subsection, and annually thereafter, the Commission shall submit to the Committee on Financial Services of the House of Representatives and to the Committee on Banking, Housing, and Urban Affairs of the Senate and publish on the website of the Commission a report that analyzes the information disclosed pursuant to paragraphs (1), (2), and (3) and identifies any trends in such information.
``(5) Best practices.--
``(A) In general.--The Director of the Office of Minority and Women Inclusion of the Commission shall, not later than the end of the 3-year period beginning on the date of the enactment of this subsection and every three years thereafter, publish best practices for compliance with this subsection.
``(B) Comments.--The Director of the Office of Minority and Women Inclusion of the Commission may, pursuant to subchapter II of chapter 5 of title 5, United States Code, solicit public comments related to the best practices published under subparagraph (A).''. SEC. 3. DIVERSITY ADVISORY GROUP.
(a) Establishment.--The Securities and Exchange Commission shall establish a Diversity Advisory Group (the ``Advisory Group''), which shall be composed of representatives from the government, academia, and the private sector.
(b) Study and Recommendations.--The Advisory Group shall--
(1) carry out a study that identifies strategies that can be used to increase gender, racial, and ethnic diversity among members of boards of directors of issuers; and
(2) not later than 9 months after the establishment of the Advisory Group, submit a report to the Commission, the Committee on Financial Services of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate that--
(A) describes any findings from the study conducted pursuant to paragraph (1); and
(B) makes recommendations of strategies that issuers could use to increase gender, racial, and ethnic diversity among board members.
(c) Annual Report.--Not later than 1 year following the submission of a report pursuant to subsection (b), and annually thereafter, the Commission shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate that describes the status of gender, racial, and ethnic diversity among members of the board of directors of issuers.
(d) Public Availability of Reports.--The Commission shall make all reports of the Advisory Group available to issuers and the public, including on the website of the Commission.
(e) Definitions.--For the purposes of this section:
(1) Issuer.--The term ``issuer'' has the meaning given the term in section 3 of the Securities Exchange Act of 1934.
(2) Commission.--The term ``Commission'' means the Securities and Exchange Commission.
Mr. Speaker, I rise in strong support of H.R. 5084, the Improving Corporate Governance Through Diversity Act of 2019.
I thank the chair of our Subcommittee on Consumer Protection and Financial Institutions, the Honorable Gregory Meeks, and the chair of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, the Honorable Carolyn Maloney, for this incredibly important piece of legislation.
According to Deloitte's 2017 board diversity survey, 90 percent of companies surveyed agreed that increased board diversity will improve their company's ability to innovate as well as their overall business performance.
Given the impact on performance, investors have an interest in the extent to which companies include diverse perspectives and people in their boardrooms and senior executive ranks.
Despite the acknowledgment by companies that the highest levels of their organizations should reflect the diversity of their shareholders, consumers, and America at large, the Alliance for Board Diversity reported that, among Fortune 500 companies, 80.7 percent of new board directors in 2017 were White men.
To address the lack of transparency and to shine a light on the lack of representation of women and minorities in corporate boardrooms and in the C-suite, H.R. 5084 would require public companies to annually disclose the voluntarily self-identified gender, race, ethnicity, and veteran status of their board of directors and nominees and senior executive officers.
This bill would also establish a diversity advisory group at the Securities and Exchange Commission and require the agency's Office of Minority and Women Inclusion to publish best practices for compliance with diversity reporting requirements.
We must ensure that the leadership of corporate America reflects the growing diversity of our Nation. Transparency and disclosure are two actions that allow progress toward racial and gender parity at the highest levels of corporations.
Mr. Speaker, I urge my colleagues to join me in supporting H.R.
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Mr. GREEN of Texas. Maloney), the chair of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets.
Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I thank the gentleman for leading and for yielding me the time.
Mr. Speaker, I rise in strong support of H.R. 5084, and I thank my good friend and colleague, Congressman Meeks, for his tremendous leadership on this bill. We have been working together on it for a long time, and I am proud to be an original cosponsor.
I also thank Chairwoman Waters for her longtime leadership on these issues and for working with me and Mr. Meeks on this bill.
The bill is very simple, but the goal is extremely important: increasing diversity in corporate leadership.
One of the key pieces of this, I believe, is getting more women and minorities in corporate leadership positions. Leaders set the tone, and they set the priorities.
I asked the GAO to study this issue in 2015. They found that women were badly underrepresented on corporate boards. They also found that, if the current trends continue, it would take more than 40 years for women to reach parity with men on corporate boards. Clearly, something needs to change.
Let's be clear. Increasing diversity in corporate leadership is not just a social issue; it is good business, too. Study after study has shown that companies with greater gender, racial, and ethnic diversity on their boards perform better financially.
This bill would help investors accomplish this by requiring public companies to report the gender, racial, and ethnic composition of their boards in their annual reports.
The bill would also establish a diversity advisory group at the SEC, which would study strategies to increase gender, racial, and ethnic diversity on corporate boards, because the truth is that making meaningful progress on corporate diversity is going to require a range of different policies in addition to the improved disclosures in this bill.
I want to be sure to thank Ranking Member McHenry and my good friend and colleague Ann Wagner for their strong support. Their leadership on the other side of the aisle has been instrumental in getting bipartisan support for this very important bill that has wide support across the community.
I urge my colleagues to support this bill.
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Mr. GREEN of Texas. Mr. Speaker, I, too, encourage my colleagues to please support this important piece of legislation. It will make meaningful change.
I yield back the balance of my time.
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Mr. GREEN of Texas. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
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