(Bloomberg) -- After a California judge struck down a state law requiring women on boards, Hawaii is trying a different tack: Set a quota for male directors, too.
Under the measure proposed last month, every Hawaii-based company would need at least one female or non-binary director and one male or non-binary director on its board by the end of this year. By late 2025, the mandate would expand to three women or non-binary members and three men or non-binary members.
Companies could be fined as much as $5,000 annually for violating the law and $500 for failing to report information on board diversity. Democratic State Rep. Amy Perruso, who introduced the legislation, didn’t respond to requests for comment.
Hawaii’s proposal comes as investors pressure companies to improve gender diversity on boards, part of a larger push to increase the representation of women and people of color in the corporate world. Progress in the US has been spotty: The pace of women gaining seats on S&P 500 boards slowed dramatically last year, signaling that parity with men may still be almost a decade away. Still, women ended the year with a record 32% of seats.
Read more: Women’s gains on S&P 500 boards slow, delaying parity progress
So far, the only US gender-diversity board mandate to become law has failed. A 2018 California measure required publicly traded companies based in the state to have at least one woman on the board by 2019 and for most companies to have three by 2021, with no minimum for male directors. But a state judge overturned that law last year, saying it violated the equal protection clause of California’s constitution. The ruling is under appeal.
It’s not clear whether Hawaii’s proposal will pass the constitutional test if it becomes law. But Darren Rosenblum, a professor at McGill University in Quebec, said the approach is similar to mandates already in effect in Europe, including a Norway law that sets both a floor and a ceiling for men and women on the board.
“The idea is not a quota for women, but gender balance,” Rosenblum said. “Almost every other large economy has some sort of mandate for diversity on boards. The US is sort of an outlier.”
The Hawaiian bill, if passed, would have a much smaller impact than California’s. There are only 22 public companies based in Hawaii, none of which are in the S&P 500, data compiled by Bloomberg show. Among those companies, half have at least one woman on the board and four appear to have only male directors.
--With assistance from Lauren Pizzimenti.
©2023 Bloomberg L.P.
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