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University of Miami Business Law Review

Document Type

Notes and Comments

Abstract

Board diversity laws have become a focus of corporations, lawmakers, and courts across the country as constitutional challenges to the policies continue to be raised. California is one of the first states to implement statutes relating to board diversity requirements for publicly held corporations within the state. Nasdaq has followed in similar footsteps, implementing new rules that require a certain number of diverse members on boards for companies listed on the exchanges or a statement explaining a lack thereof. Supporters of the board diversity laws may want to lean on arguments made upholding affirmative action policies within the university system. But that inclination has benefits and risks.

Affirmative action policy could be used to show the potential effect these board diversity laws could have on corporations. The affirmative action data could be beneficial as there are studies in education that suggest the benefits of diverse schools are translatable to other contexts. Because little-to-no data about the effect diversity on business outcomes exist, decades of affirmative action data fill an important gap. At the same time, affirmative action policy might not be the most stable moor to tie a ship. During the October 2022 term, the originalist-leaning Court signaled it is near to striking down affirmative action policies in higher education. This was confirmed by the Court’s decisions on June 29, 2023.

This Note predicts the decision could have a ripple effect on all board diversity related statutes. As affirmative action policies are struck down, policy proponents must distinguish board diversity statutes from affirmative action policies to survive the Court’s scrutiny. The path forward will require reliance upon empirical evidence, self-governance of boards and corporations, and for the rule makers at the SEC to step in and take the matter into their own hands.

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