Corporate Board Diversity is used to describe a broad range of demographic characteristics that are ables and attributes in the boardroom. This may include age, gender education, professional experience and competencies and philosophies, as well as cultural identity and race, sexual orientation and religion. This diversity could help develop an array of perspectives and skills to meet the current and future demands of the company.

A successful business requires a board that is capable of performing effectively. Therefore the composition of the board should be designed to accomplish this goal. Diversity is a way the board can accomplish this goal by encouraging different ways of thinking, leadership and emotional styles that help to increase awareness of the risk.

Investors are therefore increasingly insisting that boards of directors be diverse. In fact, several large institutions are beginning to actively vote against the board members of companies that fail to meet their requirements for gender and racial diversity. For instance in August 2017, CalPERS, a pension fund for state employees, sent letters to 504 of the companies on the Russell 3000 index and demanded that they create an implementation plan and policy to ensure diversity.

Additionally, certain states are enacting laws that require companies to adopt measures for achieving board diversity. For example, the state of California requires that public companies with headquarters in the state have a certain amount of female and underrepresented minority directors on their boards by 2021. Additionally, companies are also required to disclose racial and ethnic diversity of their boards.

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