America’s second largest stock exchange has announced it will set gender and diversity targets for the companies that are listed there.
The Nasdaq is now requiring tech giants such as Apple and Tesla to have at least two diverse directors or explain why they do not.
In order to improve the representation of women and underrepresented minorities, directors should strive for diversity by including one female director along with another who identifies as LGBTQ+.
It follows complaints of the lack of diversity in corporate America.
According to a Nasdaq study, more than three quarters of its listed companies would not have met their proposed targets last year.
The US Securities and Exchange Commission (SEC) which regulates financial markets, has given their approval of the plan, meaning it will be binding.
In an effort to make firms more transparent and accountable for working towards equality in business environments, firms will also now be required to release diversity statistics about their boards.
SEC chairman Gary Gensler said, “These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity”.
“These rules reflect calls from investors for greater transparency about the people who lead public companies, and a broad cross-section of commenters supported the proposed board diversity disclosure rule,” he added.
Nasdaq, or the National Association of Securities Dealers Automated Quotations system as it is officially known by its acronym-based name, was founded in 1971 and grew over five decades to become one of the leading stock exchanges in America.
Based in New York City, the Nasdaq index tracks 3,300 stocks and is ranked second on the list of US stock exchanges by market capitalisation of shares traded, behind the New York Stock Exchange.
