California State Treasurer John Chiang is on a mission to make California’s corporate board rooms more diverse. Chiang believes greater board diversity is simply good business, saying that those which choose to remain what Forbes once deemed “pale, male and stale” are “just not capturing the opportunities of the 21st century.”
He has started by urging leaders of two boards he sits on, the California Public Employee Retirement System and the California State Teachers Retirement System — the state’s two largest public employee pension funds — to lead the way by broadening their definition of diversity to include sexual orientation and gender identity. CalSTRS has already agreed to the request.
It is not Chiang’s first effort to get the two pension giants to tackle diversity. In 2008, as State Controller, Chiang called on both to not only broaden the diversity on their own boards but to also use their economic might (CalSTRS manages almost $200 billion in assets; CalPERS over $300 billion) to coax corporations doing business with them to reform their board selection guidelines as well. He notes that, in the past year, the two funds have worked with 126 California-based companies that have no female board members. The two systems have collaborated to build a database of diverse candidates companies could use when seeking to fill vacant board seats.
Others have made similar efforts, including the 2010 launch of the aptly-named 30% Club in the UK, a group made up of CEOs dedicated to ensuring women make up at least that percentage of top company board members by 2015. A U.S. chapter came online in 2014 with notable CEOs like Warren Buffett, Black Rock’s Larry Fink and Deloitte’s Punit Renjen in the fold. Since then, major players like Coca Cola CEO Muhtar Ken and Facebook COO Sheryl Sandberg have also joined.
Even so, Chiang notes, progress has been slower than he hoped. In 2010, women made up only 18 percent of all U.S. Fortune 100 boards; by 2012 it had climbed only to 19.8 percent. The boards also lacked cultural diversity. In 2010, minorities of both genders combined comprised only 15 percent of Fortune 100 boards; in 2012 that figure had nudged only slightly upward to 16.3 percent.
Those stats are disturbing to people like Barbara O’Connor, a national board member for AARP and the former professor and director of the Institute for the Study of Politics and Media at Sacramento State. She currently sits on four boards in addition to AARP and has served on more than 30 in her career.
“I really commend John Chiang for taking this on,” O’Conner says. “In California this is actually critical. We are the most diverse state in the country, with huge pockets of immigrants that are a huge part of our economy. We are much better off figuring out how to better incorporate them into the economy than to ignore them.”
While noting the room for improvement, Chiang says he believes the goals that he and groups like the 30% Club have set will be reached. It just requires the constant emphasis by the powers that be to make it happen.
“Once it’s part of common parlance, once it’s practice, once people get to know each other, we will see the change,” he says. “Hopefully sooner rather than later.”
For Rich Ehisen’s full interview with California State Treasurer John Chiang, check back next week. Sign up for our newsletter, and we’ll email you when it’s available online.