{"id":24585,"date":"2020-07-01T05:10:30","date_gmt":"2020-07-01T12:10:30","guid":{"rendered":"https:\/\/www.yardi.com\/blog\/?p=24585"},"modified":"2020-12-25T02:43:37","modified_gmt":"2020-12-25T10:43:37","slug":"new-ipo-standards","status":"publish","type":"post","link":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/","title":{"rendered":"New IPO Standards"},"content":{"rendered":"

The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst the board members of new applicants in the United States and Europe. When announced in January, the investment bank could not have foreseen how poignant the pledge would become.\"\"<\/p>\n

All eyes on diversity<\/strong><\/p>\n

Late spring and summer brought an onslaught of social issues to the forefront of American culture. As the nation attempted to establish a new normal amidst COVID-19 precautions, essential workers kept the economy and healthcare systems afloat. During these times, 1 in 3 women were considered essential workers<\/a>. Also during this time, researchers revealed that the pandemic brought worsening economic and social inequalities for women<\/a>. The necessary role of women in the workforce juxtaposed the inadequate measures to help them balance the demands of work and home.<\/p>\n

To add to the complexity, March marked the beginning of social unrest. A series of police-involved shootings sparked the first wave of protests highlighting discrimination against minorities within the justice system. The protests continued into June, joined by Pride Month events that highlight the struggles of the LGTBQ community in the workplace and healthcare system. Consumers and employees across the U.S. forced businesses and institutions to examine their inclusion practices or lack thereof.<\/p>\n

Goldman Sachs CEO David Solomon could not have foreseen any of this back in January. He could not have known that pandemic fallout and social justice demonstrations would place the bank at the forefront of the social equity revolution on Wall Street–but timing is everything, even when it\u2019s unplanned.<\/p>\n

Bye bye \u201cbro boards\u201d <\/strong><\/p>\n

Goldman Sachs now requires all American and European IPOs to have at least one \u201cdiverse\u201d board member. Solomon emphasized that women are the initial focus, but ultimately any non-straight white board member will suffice. In 2021, the bank will strongly encourage at least two diverse board members.<\/p>\n

Goldman Sachs is not above its own ordinances. On its board of 11 members, four are women. There is also a black lead director. \u201cI really value the diverse perspectives I’m getting which are helping me run the company,” Solomon said during an interview with CNBC<\/a>.<\/p>\n

While ethics is a factor\u2014one that is being pushed by the bank considering recent events\u2014it wasn\u2019t the main driver behind the pledge. Solomon cites research that U.S. companies with diverse boards perform better.<\/p>\n

\u201cI look back at\u00a0IPOs\u00a0over the last four years and the performance of IPOs where there has been a woman on the board in the U.S. is significantly better than the performance of IPOs where there hasn\u2019t been a woman on the board,\u201d Solomon added.<\/p>\n

Diversity as a proven asset<\/strong><\/p>\n

There is plenty of support for his statement. Companies with diverse boards rank higher on measures of sustainability like profits and performance, all of which are favorable to asset managers. MSCI, a leader in investment data and analytics, discovered that organizations with a strong female presence on their boards have higher returns on equity<\/a> and more stable adherence to governance.<\/p>\n

Additionally, when analyzing 165 equity REITs, Wells Fargo reported that companies with an elevated percentage of female board members attained higher average price, higher total returns and outperformed competitors<\/a> with no female representation by 1.93 to 2.33 percentage points.<\/p>\n

It\u2019s not just women. Minority representation bodes well for businesses overall. The Delivering through Diversity report by McKinsey consulting firm reports that \u201ccompanies in the top-quartile for ethnic\/cultural diversity on their executive teams were 33% more likely to have above-average profitability.\u201d<\/p>\n

When does diversity transform into profits and cultural changes? The Female Quotient, an organization that advocates for gender equality, reports 30% is the magic number. \u201cWhen you have a minimum of 30%, that’s when you see a transformation of culture and a true transformation of how business operates,” says CEO Shelley Zalis, CEO. The Goldman Sach\u2019s mandate won\u2019t bring most boards to 30%, but it\u2019s a start.<\/p>\n

It\u2019s only new in the U.S. <\/strong><\/p>\n

Goldman Sach\u2019s initiative may seem revolutionary, but it\u2019s not. The U.S. is one of the few nations without federal mandates for corporate board diversity. Norway, Belgium, Italy, Germany and France, for example, began inclusion practices nearly 30 years ago. Each requires a board with at least 40% female representation.<\/p>\n

Arguably, Goldman Sachs is pushing the U.S. to be more competitive in the international arena. Research confirms that diverse boards are better governed, more sustainable and more profitable. There are still some who argue that enforcing diversity measures is unnecessary and even unconstitutional.<\/p>\n

Does the Constitution make space for diversity mandates?<\/strong><\/p>\n

The debate began in California. The Golden State was the first to pass legislation on diversity in the boardroom. The California gender diversity mandate, SB 826, requires publicly traded companies to have at least one female board director or pay a $100,000 fine. Overall compliance is favorable, with more than 282 out of 400 tracked firms in compliance to date. Massachusetts, New Jersey and Washington are crafting similar legislation, reports National Public Radio<\/a> (NPR).<\/p>\n

Ellen Kullman, one of the Goldman Sachs female board members and former CEO of DuPont, told NPR that the law \u201cforces companies that resist change to take action. Companies have long chosen board members based on their network of friends and acquaintances.\u201d She adds, “That’s where I think the history has led to mostly male boards. Because if it’s word of mouth and you ask the men, historically, they have given a lot of names of other men.\u201d<\/p>\n

There are still some who resist change. The Pacific Legal Foundation, representing OSI Systems shareholder Creighton Meland, sued the Secretary of State of California. The firm alleges that the bill is unconstitutional under the Equal Protection Clause of the Fourteenth Amendment<\/a>. Additionally, it will relegate women to \u201cquota hires\u201d and \u201cspace fillers.\u201d<\/p>\n

\u201cEurope is so far ahead of us,\u201d said Margarethe Wiersema<\/a>, a professor of management at the University of California-Irvine. \u201cIt’s like we\u2019re in the Dark Ages on this.\u201d Pending Meland vs. California, that could be where the U.S. stays. The research presented by Goldman Sachs, California, Massachusetts, New Jersey and Washington, however, could give pro-diversity advocates the \u201cexceedingly persuasive justification\u201d needed to succeed in court.<\/p>\n

Industry disruption or a drop in the pond?<\/strong><\/p>\n

The data on board diversity is promising, and the new pledge at Goldman Sachs brings that data to the intersection of ethics, profitability and the future of publicly held businesses in America and Europe. As one of the top three IPO underwriters in recent history, the institution is a force for change.<\/p>\n

If \u201cbro culture\u201d organizations do not want to play by Goldman Sachs new rules, they do have options. Competitors Morgan Stanley and JPMorgan Chase & Co. have yet to institute similar requirements.<\/p>\n

\u201cWe might lose some business but in the long run this is the best advice for companies that want to drive premium returns for their shareholders,\u201d Solomon said.<\/p>\n

Except Goldman Sachs is not likely to lose much business at all. Per US and European listings recorded in the last two years, more than 90% had a board that already met diversity pledge standards. Additionally, about half of the top 10 IPOs during that time were headquartered in Asia and the Middle East. Both regions are exempt from Solomon\u2019s pledge.<\/p>\n

Though Goldman Sachs has little on the line, Solomon\u2019s pledge seems daring and disruptive in a way that resonates with the public outcry for a more equitable and inclusive society. \u201cWe have the power in our business to be so damaging to culture or to really heal culture and help people understand,\u201d tweets Goldman Sachs.<\/p>\n","protected":false},"excerpt":{"rendered":"

The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst the board members of new applicants in the United States and Europe. When announced in January, the investment bank could not have foreseen how poignant the pledge would become. […]<\/p>\n","protected":false},"author":440,"featured_media":24588,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_s2mail":"yes","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4],"tags":[2862,2861,2045,125],"class_list":["post-24585","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-business-trends","tag-corporations","tag-diversity","tag-news-2"],"acf":[],"yoast_head":"\nYardi Blog<\/title>\n<meta name=\"description\" content=\"The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New IPO Standards\" \/>\n<meta property=\"og:description\" content=\"The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/\" \/>\n<meta property=\"og:site_name\" content=\"Yardi Blog\" \/>\n<meta property=\"article:published_time\" content=\"2020-07-01T12:10:30+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-12-25T10:43:37+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1262\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Erica Rasc\u00f3n\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Erica Rasc\u00f3n\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/\",\"url\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/\",\"name\":\"New IPO Standards - Yardi Corporate Blog\",\"isPartOf\":{\"@id\":\"https:\/\/www.yardi.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg\",\"datePublished\":\"2020-07-01T12:10:30+00:00\",\"dateModified\":\"2020-12-25T10:43:37+00:00\",\"author\":{\"@id\":\"https:\/\/www.yardi.com\/blog\/#\/schema\/person\/d63afaf076d5863391dd49858ccef2ac\"},\"description\":\"The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst\",\"breadcrumb\":{\"@id\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#primaryimage\",\"url\":\"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg\",\"contentUrl\":\"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg\",\"width\":1920,\"height\":1262},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.yardi.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"New IPO Standards\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.yardi.com\/blog\/#website\",\"url\":\"https:\/\/www.yardi.com\/blog\/\",\"name\":\"Yardi Blog\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.yardi.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.yardi.com\/blog\/#\/schema\/person\/d63afaf076d5863391dd49858ccef2ac\",\"name\":\"Erica Rasc\u00f3n\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.yardi.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/09382010b8c97da56343095c2854ad7733a3c2e094f59f75eb5ef1aacf501bcf?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/09382010b8c97da56343095c2854ad7733a3c2e094f59f75eb5ef1aacf501bcf?s=96&d=mm&r=g\",\"caption\":\"Erica Rasc\u00f3n\"},\"description\":\"Erica Rasc\u00f3n specializes in online content creation and social media. She joined Yardi in 2011 after receiving her bachelor's degree from Kennesaw State University and serving in the Peace Corps. Erica's interests include sustainability, philanthropy, and the arts.\",\"url\":\"https:\/\/www.yardi.com\/blog\/author\/ericajarrell\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Yardi Blog","description":"The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst","robots":{"index":"noindex","follow":"follow"},"og_locale":"en_US","og_type":"article","og_title":"New IPO Standards","og_description":"The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst","og_url":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/","og_site_name":"Yardi Blog","article_published_time":"2020-07-01T12:10:30+00:00","article_modified_time":"2020-12-25T10:43:37+00:00","og_image":[{"width":1920,"height":1262,"url":"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg","type":"image\/jpeg"}],"author":"Erica Rasc\u00f3n","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Erica Rasc\u00f3n","Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/","url":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/","name":"New IPO Standards - Yardi Corporate Blog","isPartOf":{"@id":"https:\/\/www.yardi.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#primaryimage"},"image":{"@id":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#primaryimage"},"thumbnailUrl":"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg","datePublished":"2020-07-01T12:10:30+00:00","dateModified":"2020-12-25T10:43:37+00:00","author":{"@id":"https:\/\/www.yardi.com\/blog\/#\/schema\/person\/d63afaf076d5863391dd49858ccef2ac"},"description":"The first day of the Goldman Sachs diversity pledge has arrived. The investment bank announced that as of July 1, 2020, it will require diversity amongst","breadcrumb":{"@id":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.yardi.com\/blog\/new-ipo-standards\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#primaryimage","url":"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg","contentUrl":"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg","width":1920,"height":1262},{"@type":"BreadcrumbList","@id":"https:\/\/www.yardi.com\/blog\/new-ipo-standards\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.yardi.com\/blog\/"},{"@type":"ListItem","position":2,"name":"New IPO Standards"}]},{"@type":"WebSite","@id":"https:\/\/www.yardi.com\/blog\/#website","url":"https:\/\/www.yardi.com\/blog\/","name":"Yardi Blog","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.yardi.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.yardi.com\/blog\/#\/schema\/person\/d63afaf076d5863391dd49858ccef2ac","name":"Erica Rasc\u00f3n","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.yardi.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/09382010b8c97da56343095c2854ad7733a3c2e094f59f75eb5ef1aacf501bcf?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/09382010b8c97da56343095c2854ad7733a3c2e094f59f75eb5ef1aacf501bcf?s=96&d=mm&r=g","caption":"Erica Rasc\u00f3n"},"description":"Erica Rasc\u00f3n specializes in online content creation and social media. She joined Yardi in 2011 after receiving her bachelor's degree from Kennesaw State University and serving in the Peace Corps. Erica's interests include sustainability, philanthropy, and the arts.","url":"https:\/\/www.yardi.com\/blog\/author\/ericajarrell\/"}]}},"jetpack_featured_media_url":"https:\/\/www.yardi.com\/blog\/wp-content\/uploads\/sites\/15\/2020\/07\/1920-diversity-board-mandates.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/posts\/24585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/users\/440"}],"replies":[{"embeddable":true,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/comments?post=24585"}],"version-history":[{"count":3,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/posts\/24585\/revisions"}],"predecessor-version":[{"id":24591,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/posts\/24585\/revisions\/24591"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/media\/24588"}],"wp:attachment":[{"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/media?parent=24585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/categories?post=24585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.yardi.com\/blog\/wp-json\/wp\/v2\/tags?post=24585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}