Goldman Sachs will not take a company public unless there is at least one “diverse” candidate on the board.
Speaking at Davos last Thursday, the bank’s chief executive David Solomon said: “From a governance perspective, diversity on boards is a very, very important issue.”
The push for diversity will be focused primarily on women.
Solomon highlighted that initial public offerings (IPOs) in the US with at least one woman on the board had performed better than those without over the last four years.
He told CNBC: “Starting on 1 July in the US and Europe, we’re not going to take a company public unless there’s at least one diverse board candidate with a focus on women.”
By 2021 Goldman Sachs would require companies to have two diverse board members.
Solomon said that the move was not just taking a stance on the issue but also good for business. “I really value the diverse perspectives I’m getting which are helping me run the company.”
Of its 11 total members, Goldman Sachs has four women on its board and a Nigerian-born lead director.
Former Google executive and current president of StubHub, Sukhinder Singh Cassidy, welcomed Solomon’s announcement.
Corporate governance within tech startups came under heavy scrutiny following the failed float of office-sharing firm WeWork.
The We Company faced criticism from analysts over plans to go public with an all-male board.
An amended IPO filing the company said former Uber executive Frances Frei would join the board upon completion.
Boardspan chief executive Abby Adlerman told Bloomberg: “The pressure’s been building for quite a while for people to pay attention to a lot of the ESG issues.”
Microsoft, Oracle and Netflix all have four females on their boards.
Solomon said that Goldman Sachs will work with companies that lack diversity to help them recruit people to the board.