Goldman Sachs has decided to discontinue its internal diversity rule, which previously required companies seeking its advisory services for public listings to have at least two diverse board members.
The investment bank introduced the policy in 2020 to encourage greater board diversity, initially mandating one diverse member before later increasing the requirement to two.
Goldman Sachs Vice Chair Richard Gnodde explained the decision, stating that the rule had successfully influenced board composition and was no longer necessary.
“That policy was put in place to try and drive a change in behavior, and I think that’s happened,” he told the BBC.
Despite the policy’s conclusion, Gnodde emphasized that the firm still values diverse perspectives in corporate governance.
“I think what is important is that you have a diversity of views on that board, and if you look at these companies, they’ve all embraced diversity. It’s moved along. I think it has served its purpose.”
The decision comes amid broader shifts in corporate diversity policies. According to The Conference Board, a US think tank, while corporate boards are now more diverse than ever, the pace of racial diversity hiring on boards slowed between 2022 and 2024. Among the 500 largest US firms, the share of non-white directors reached 26% in 2024, while women made up 34% of board seats.
Legal developments have also influenced corporate diversity efforts. A December 2023 ruling by a US federal appeals court determined that Nasdaq could not enforce rules requiring companies to have women, minorities, or LGBTQ+ members on their boards—or explain why they did not. Goldman Sachs acknowledged that legal factors played a role in its policy change, stating:
“As a result of legal developments related to board diversity requirements, we ended our formal board diversity policy.”
The firm did not specify whether it was directly referencing the Nasdaq ruling.
The move by Goldman Sachs follows a broader trend among major corporations reconsidering their diversity, equity, and inclusion (DEI) initiatives. Several companies, including Google and Meta, have scaled back diversity programs in response to legal challenges and shifting political landscapes. US President Donald Trump signed an executive order rolling back government DEI programs, which some observers believe has influenced corporate decision-making.
However, Gnodde dismissed the notion that Goldman’s decision was politically motivated.
“I can only speak for ourselves. I don’t think that’s the case. Our ambitions are to continue to take things forward and frankly to go much further than we have been,” he said.
BBC and the Financial Times contributed to this report.
