Goldman should hail its diverse board, not kowtow to anti-DEI bullies

The decision by Goldman Sachs to scrap key diversity, equity and inclusion (DEI) rules for selecting its board of directors is the latest evidence of the powerful backlash against so-called “woke capitalism” or, as it used to be called, good governance.

Until this decision, the investment bank used four criteria to screen potential board candidates, including a diversity rule spanning background, ideas and beliefs, professional and military experience, and the now-axed “other demographics” category of race, gender identity and sexual orientation. This move follows Goldman’s dropping of diversity targets from a key regulatory filing and abandoning its pledge to refuse IPO business from companies with all-white, all-male boards.

In 2019, David Solomon, Goldman’s CEO, declared diversity and inclusion a “top priority”. What has changed since? The Trump administration has made clear its hatred of DEI and threatened to punish companies persisting with it. The National Legal and Policy Center (NLPC), a conservative non-profit, recently made a shareholder proposal demanding Goldman drop its board diversity criteria – withdrawn now the bank has delivered what it wanted. The NLPC has struck similar deals with others, including American Express.

It would have been better for Goldman to make a stand, especially as it says it continues to believe in the case for diversity. This had led it to change the composition of its 14-strong board, which now includes five women (one multi-racial) and an Indian member.

Wouldn’t it have been great to hear Goldman explain how this diversity has actually improved its governance? It could also have drawn attention to the growing body of evidence that when diversity and inclusion are taken seriously at the top (and not seen just as a box-ticking exercise) it tends to improve a company’s long-term performance.

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