Goldman Sachs Abandons Diversity Rule as Progress Evident

Goldman Sachs' CEO Richard Gnodde announced the termination of the bank's internal rule requiring diverse representation on boards for flotation approval, citing significant progress in diversity practices among businesses. Gnodde also urged the UK government to expedite vital infrastructure projects while addressing the impact of US policy uncertainty on corporate investment appetites.

Goldman Sachs International's chief executive Richard Gnodde has confirmed the bank's abandonment of an internal diversity policy that previously prohibited it from advising all-male, all-white boards for company listings. Introduced in 2020, the rule mandated that companies seeking to raise capital through stock flotation must have two diverse board members—one being a woman. However, Gnodde stated during an interview that the policy has fulfilled its original intent of encouraging better corporate practices around diversity.

Reflecting on the change, he mentioned, “That policy was put in place to try and drive a change in behavior and I think that's happened.” The CEO emphasized that many companies have now made diversity a fundamental part of their boards and organizational practices, signaling a shift in corporate culture without the need for such strict requirements.

The backdrop to this decision was a recent ruling by a US federal appeals court which concluded that Nasdaq could not impose regulations requiring board diversity, thus influencing the direction of corporate ethics and practices in hiring. "As a result of legal developments related to board diversity requirements, we ended our formal board diversity policy,” said a Goldman spokesperson.

During the interview, Gnodde also addressed broader economic concerns, particularly in the UK, suggesting that the government must initiate infrastructure projects promptly. He remarked on the necessity of progressing infrastructure developments to stimulate growth, especially in light of sluggish economic expansion indicated by recent reports.

Highlighting the current political climate, he pointed out that uncertainty regarding US trade policies could deter companies' willingness to invest, which he referred to as impacting their "animal spirits." This concern echoes earlier apprehensions during the Trump administration related to tariffs imposed on key trading partners, notably Canada and Mexico.

As Goldman Sachs continues to assess the implications of its policies, Gnodde maintains a forward-looking approach, expressing intentions to not only preserve but cultivate ambitions around increasing diversity and improving economic competitiveness within the UK market. "Let's find some infrastructure builds that we need to do... and see the private sector come to the table with bids," he stated, advocating for strategic developments to ensure sustainable economic progress.