US appeals court rejects Nasdaq's diversity rules for company boards

[u/ShivasRightFoot]

https://apnews.com/article/nasdaq-sec-dei-diversity-board-a3b8803a646a62aeb2733bbd4603e670

[u/Ensemble_InABox]

It's great that this is coming to light very publicly. It's fairly well known that Blackrock does this informally and mostly quietly to companies they own major stakes in. Essentially the exact same policy, they pressure companies financially to remove existing board members to ensure that they have at least one non-white, non-asian board member, and as far as I have seen, an LGBTQ person suffices.

As an aside, I've always found LGBTQ DEI just straight-up bizarre. How do they even verify someone's sexuality? It's comical.

[u/ShivasRightFoot → u/Ensemble_InABox]

Essentially the exact same policy, they pressure companies financially to remove existing board members to ensure that they have at least one non-white, non-asian board member, and as far as I have seen, an LGBTQ person suffices.

I'd be interested to see this documented. Is there a series of news articles on the topic? I am aware of their incident with the Exxon-Mobile board over environmental policies, but nothing with specific regard to race in terms of an actual case. I am aware that the DEI part of ESG accounting is specifically racial (you need to dig pretty deep to find it; first you need the ESG bit on DEI and then that references an NGO created set of reporting standards which defines "diversity" to exclude White people and Men), but not of a specific incident where Blackrock applied pressure on DEI policies per se.

[u/Ensemble_InABox → u/ShivasRightFoot]

Most of my knowledge is just pieced together over the years from personal investing, but here's a Fox Business article from last year quoting Larry Fink on "forcing behaviors" relating to inclusion. He also talked about racial equity in his 2022 letter to CEOs.

Despite being one of the largest companies in the world and the largest asset management firm ($9 trillion AUM), Blackrock operates largely behind the scenes and gets little media coverage.

Feel free to take this with a large grain of salt, but I'll add a personal anecdote as well. I know the CEO and Board Chairman of a small (200 ee) medical device company that's been public since 1999. The company has had the same board of directors for 25 years, a tight-knit group of people who were key leaders in the company's early days, but are not diverse. He's been under pressure since 2020, from Blackrock, to diversify his board. He's the founder and has basically called their bluffs - votes of no confidence to remove him as chairman, public pressure, divestment threats, etc. Nothing has really happened and the board hasn't changed, and he's about ready to retire anyways.

[u/ShivasRightFoot → u/Ensemble_InABox]

He's been under pressure since 2020, from Blackrock, to diversify his board. He's the founder and has basically called their bluffs - votes of no confidence to remove him as chairman, public pressure, divestment threats, etc.

I'd be really curious how these threats were communicated. I'd be suspicious that he may be reading into things and imposing an interpretation, and while I'd be inclined to believe it I don't think I'd find it convincing fully. Also I could see something more direct, like an email saying "We expect companies to have XYZ and we will potentially vote shares if otherwise," which is not outside the realm of possibility.