By Briasia Russ

The Securities and Exchange Commission approved a new policy that will increase the number of women, racial minorities and LGBTQ people on U.S corporate boards. 

According to AP News, this new policy will require 3,000 companies listed on Nasdaq to have at least one woman, one person from a racial minority or someone who is a part of the LGBTQ community on their board of directors.  

“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity, while ensuring that those companies have the flexibility to make decisions that best serve their shareholders,” SEC Chair Gary Gensler said in a statement accompanying the decision. 

AP News reported that Republican lawmakers opposed the new policy, arguing the requirements were arbitrary and burdensome. A letter was written by Republicans on the Senate Banking Committee that urged the Securites and Exchange Commission to reject the plan. “America’s corporate boardrooms are not the place for social engineering,” the letter wrote.  

If a company does not meet the diversity requirement they will not be removed from the list, but instead must publicly explain why they could not meet the criteria.  

“We are pleased that the SEC has approved Nasdaq’s proposal to enhance board diversity disclosures and encourage the creation of more diverse boards through a market-led solution,” Nasdaq said. The exchange is partnering with Equilar, an organization that advocates for more diverse boards, to help companies recruit board candidates.