The Business Case for Boardroom Diversity

When big banks see a benefit in helping companies recruit more diverse directors, it’s a sign that there are not just morals at play — there is money at stake, too.

By Lauren Hirsch

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When Goldman Sachs announced that it would help companies go public only if they had at least one diverse board member — meaning that the bank wouldn’t work with I.P.O. hopefuls whose directors were all white men — it was met with a mix of support and skepticism. In the year since, with less fanfare, the bank has also built up a business to help recruit directors for those boards, which has expanded to cover public companies as well.

“It became very clear to us early on that board diversity is something that’s important — and should be — to all of our clients,” said Ilana Wolfe, Goldman’s head of corporate board engagement.

For its part, JPMorgan Chase has had a board advisory service since 2016. It’s not focused exclusively on diversity, but that has been a priority since its early days. Of the 42 board members the service has placed, 30 are women and five are people of color.

Big banks getting involved in helping boards diversify suggests that there is a business case for it. Or, put more bluntly, there are future fees to be made.

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