Hundreds of bills are passed every year, so it takes a very noteworthy bill to catch attention and spark a nationwide conversation. One such bill, proposed in California, passed into law on September 30th. And even though it has been several weeks since it became law, people are still talking about its implications.
California’s Governor Jerry Brown signed the bill, which requires all publicly traded companies in the state to have women on their boards. This law, which is already commonplace in Europe, goes beyond prohibiting all male boards. It also requires companies with five board members to add at least two women, and companies with six or more board members to add at least three more women. All companies have until the end of 2021 to make these changes.
If the changes aren’t made by the end of that year, the punishment will be costly. For the first failure to comply, companies will be fined $100,000. If the company fails to comply a second time, the fine triples to $300,000.
Who Does This Affect?
For the majority of California’s publicly traded companies, this news should not be too difficult to comply with. Three fourths of the state’s companies have already paved the way to equality and currently have at least one woman on their board. But that still leaves 25% of companies outside of the law completely. So, from now until the end of 2021, they have roughly 3 years to improve by abandoning their “boys only” boards.
Why Does This Matter?
This law matters because women are essential players in the U.S. economy. The impact of women on the market can be summed up in a few short facts:
- Women influence and drive 70% to 80% of all consumer spending.
- By 2019, global spending by women will reach $18 trillion.
- The buying power of women continues to increase.
- Marketing towards women continues to increase.
- Women have control over more than 60% of personal wealth in the U.S.
- The purchasing power of women in the U.S. ranges from $5 trillion to $15 trillion
Through just a few simple statistics, it is easy to see that women are good for business. They drive the economy and influence markets in a significant way. And since 70-80% of purchases are made by women, it makes good business sense to have women selling to women, as they better understand what others want.
Based on these factors, the thoughts and experiences of women give companies insight and advantage. It is undeniable that furthering gender equality isn’t just an ethical issue, but an economic one too.