Would a “Wise Latina” in the Boardroom Make Any Difference?

“Do you believe that diversity in the boardroom is a significant issue?”  The U.S. Securities and Exchange Commission (SEC), the government body charged with protecting investors, asked this question of market participants last week.

I put the SEC’s question forward to the JustMeans community and an insightful debate on the very meaning of diversity ensued.  Commenters on JustMeans connected sound governance to diversity, raised the potential of falling victim to decision making paralysis if endless perspectives are considered, and debated if diverse experiences among people of similar origins can provide a full spectrum of opinions or simply variations of opinion ultimately tethered to the same root.  Intel was highlighted as a bright spot, being one of elite few Fortune 100 company Boards led by an independent, female Chair. But JM commenters also noted the dismal progress made on board diversity in the U.S. in the last decade.

The relevance of diversity and how it impacts decision making is especially topical for anyone who followed last week’s 4 day marathon of confirmation hearings for Justice Sonia Sotomayor, Barack Obama’s first nominee to the U.S. Supreme Court.   Sotomayor, who is poised to become the first Hispanic on the bench, was grilled again and again over her 2001 comment that a wise Latina woman would more often reach a better conclusion than a white male.

Sotomayor responded that no “ethnic, racial or gendered group has an advantage in sound judgment," but that different backgrounds lead to different insights that can more broadly inform decision making.  If you believe, as I do, that gender and ethnic diversity lead us to view challenges in unique ways, then diversity in the boardroom can only improve debate and the decisions it informs. Many would agree. CalPERS, the largest public pension fund in the U.S., has undertaken efforts to diversify boards and believes that homogenous boards may find themselves at a competitive disadvantage. A 2008 study by the European Corporate Governance Institute and London School of Economics found that an appropriately diverse Board is more likely to hold CEOs accountable.

For the purpose of this blog, I must also ask, could greater diversity help lead us toward investment strategies that maximize financial, environmental, social and governance gains? Yes. As the lively debate among the global JustMeans community demonstrates, we experience corporate impacts on ESG factors differently.  Knowledge can be myopic. It is diverse knowledge that = power, and I would like to see a lot more of that behind the boardroom door.

One way to do some “good work” on this issue- the public comment period on the significance of Boardroom diversity is open through September 15, 2009.  Follow this link and let the SEC know what you think!