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Business News/ Opinion / Quick Edit/  Opinion | Goldman’s diversity push
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Opinion | Goldman’s diversity push

US-based investment bank declared that from July it would not help businesses in US and Europe make a debut on bourses if all its directors are male Caucasians

(Photo: Reuters)Premium
(Photo: Reuters)

Companies that want to enlist their shares for public trading had better watch the composition of their boards. The US-based investment bank Goldman Sachs has declared that from July, it would not help businesses in the US and Europe make a debut on bourses if all its directors are male Caucasians. David Solomon, the chief executive of Wall Street's largest underwriter of initial public offerings, chose the World Economic Forum at Davos to send out a message that it would not work with companies that fail minimum expected diversity norms. This is commendable.

While Goldman’s mandate does not cover Asia in its sweep yet, it's inevitable that the region, where corporate boards seem even less representative of the markets they aim products and services at, will have to take a hard look at its instruments of business governance. The Wall Street firm’s decision is also likely pressure other investment banks to adopt similar policies, potentially prompting a global shake-up of board rooms.

While cynics might see such calls for board diversity as mere tokenism, various studies suggest that the leadership of any organization operates best when it has guidance and advisory views that span a cross-section of society at large. A variety of perspectives results in superior decisions. It also tempers corporate behaviour and helps filter out disastrous moves. In short, it makes business sense. A global push for diversity in the exercise of corporate power was long overdue. In India, too, authority remains skewed in favour of a thin largely-male upper-crust. This would need to change for better commercial outcomes.

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Published: 25 Jan 2020, 04:57 PM IST
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