NASDAQ’s New Diversity Requirements Encourage Hope in a Distraction

NASDAQ’s New Diversity Requirements Encourage Hope in a Distraction

Taji Amani

August 30, 2021 / 6321 AFK

The US Securities and Exchange Commission (SEC) recently approved the NASDAQ’s new requirements of companies that list their companies on the exchange. On August 6th, a press release from the SEC announced, “Today, the Commission approved Nasdaq Stock Market LLC’s proposed rule changes related to board diversity and disclosure.” The rule states that the boards of directors of listed companies must have one woman and one ethnic minority or one member who identifies as LGBTQ+. NASDAQ proposed this rule to the SEC near the end of 2020. Their press release at the time stated,

“…the new listing rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their board of directors. Additionally, the rules would require most Nasdaq-listed companies to have, or explain why they do not have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+. Foreign companies and smaller reporting companies would have additional flexibility in satisfying this requirement with two female directors… An “underrepresented minority” is an individual who self-identifies in one or more of the following groups: Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander or Two or More Races or Ethnicities.”

Now that the SEC has approved the new diversity requirements, it is being lauded by many as a step forward in social progress. Naturally, the social conservatives and “free” market advocates object. The National Law Review published a short statement about the new rule which included brief rebuttals to conservatives’ concerns about the relevance of an identity-based rule and concerns about discrimination.

“The CEO of Nasdaq has countered this notion by, citing many studies that have indicated that a more diverse board, leads to stronger corporate governance and financial performance. Lawyers for Nasdaq have also argued against the claim that the new listing rule, is a sexist and racist quota system, because the rule allows for companies to provide a written explanation for why they are unable to meet diversity targets, thus allowing companies who are non-compliant with the rule to remain listed.”

There are other shortcomings to this rule that even liberal and progressive capitalists would acknowledge. For one, the new NASDAQ rule reflects corporate America’s difficulty in squarely addressing issues of race. While the requirement of a woman-identified board member is clear and non-substitutable, the requirement for any ethnic minority is vague and substitutable. A more robust, but still tokenist, rule would include an explicit, non-substitutable requirement for ethnic diversity and a separate, non-substitutable requirement for sexual orientation or nonbinary gender identity. Secondly, the rule does nothing to advance employee control of their own companies and boards. Even given the example of several European countries that require that workers elect a significant portion of their boards, this was not included in the new rule. This exemplifies the persistent classism inside of corporate, liberal progressivism.

Most importantly, for those of us interested in the human dignity of black people and other colonized communities, this measure falls far short of progress and even distracts us from more viable solutions. The considerations that went into this rule drastically underestimate the gravity of the situations facing the marginalized communities that this measure purports to “help” because diversity and inclusion (D&I) initiatives in corporate America only benefit limited groups of people. They benefit the shareholders who benefit from the better performance of companies with more diverse boards of directors. Unfortunately, securities, like the stocks and corporate bonds available via NASDAQ, are mostly held by wealthier households, well-capitalized companies and other major institutions. Some members of the “middle” class hold a few securities in retirements accounts. Fewer black, middle class families are in this category. However, the majority of black households are not. Again, this “progressive” D&I rule maintains the classism that is inherent to capitalism.

Source: Visual Capitalist; Federal Reserve Board of Governors

D&I initiatives in corporate America are not adequate solutions to turning the tide of economic marginalization of black or indigenous people in the US. Arguably, it is an economic impossibility for even half of black America’s labor force to be hired into the winning side of capitalism where housing, healthcare, nutritious food, clean air and clean water are consistently attainable. Greater inclusion into massa’s “burning house” of capitalism improves the financial wellbeing of the few of us who are allowed in the house, but that’s it. Only the most privileged or most exceptional members of a marginalized class benefit from corporate D&I initiatives. It isn’t a genuine solution to the marginalization that most black people have experienced since colonization.

Consider that despite the Civil Rights Movement, despite a Congressional Black Caucus, despite corporate affirmative action, despite a black UN Secretary General, despite a black US President, despite a black Secretary of Defense, despite the current D&I fad in corporate America, despite a black woman head of the World Trade Organization and despite the creation of several black billionaires, median black wealth in the US is still disappearing. We can’t wait for NASDAQ, Wall Street, Black Wall Street, corporate D&I initiatives or Kamala Harris to include most black people, nor any colonized population, into the small corner of capitalism in which people can consistently meet their basic needs.

At best, diversity-in-capitalism is a contaminated band aid that inadvertently distracts marginalized communities from genuine solutions – self-determined, truly democratic power. At worst, it is a clever distraction from solutions that would confront the root causes of marginalization that is put forward by wealthier liberals who support the idea of social justice, but not enough to give up the trappings of neocolonialism. Either way, reforming capitalism no longer warrants black people’s consistent, tireless buy-in. We cannot continue to be distracted by the exclusive trinkets of assimilationist economics and politics.

We can put our hope in more black people looking to our self-determined values and philosophies and other values and philosophies that are in the interests of the majority of black people, not just the few of us who are allowed into corporate spaces. We can put our hope in more black people creating commercial institutions that systematically embody those values and philosophies. We can put our hope in these black institutions joining forces with like-minded indigenous, Latinx, brown, Asian and Caucasian institutions. Independent black thought, independent black financial institutions and independent black power have far less of a failing record than does reforming and "diversifying" capitalism. The greatest potential for finance to secure black financial health, black housing stability, clean air, clean water, safety from law enforcement and a healthy global ecosystem will come from self-determined, solidarity economy institutions, in which power is anchored democratically in low wealth, black communities.