Board diversity disclosure is undergoing a meaningful recalibration. After years of increasing pressure by shareholders and other stakeholders to increase the number of women and underrepresented minorities on boards and provide robust disclosure of board demographic information, the framework is now shifting. Following the U.S. Court of Appeals Fifth Circuit’s December 2024 decision to strike down the rule requiring Nasdaq-listed companies to include board diversity disclosure in their proxy statements, the Trump Administration’s targeting of DEI programs, and the related pullback from the major proxy advisory firms and institutional investors in their stewardship principles and voting guidelines, companies are now re-assessing how they define and describe the diversity of directors serving on their boards in their proxy statements. While companies continue to emphasize that their boards include directors with diverse skills, backgrounds, experiences and viewpoints, proxy statement disclosure increasingly frames diversity in broader terms instead of focusing primarily on protected classes.
Link to Changes in the Proxy Landscape Changes in the Proxy Landscape
At the high point of the board diversity campaigns, various states took action to codify diversity laws in the absence of corresponding rulemaking at the federal level. For example, California passed mandatory board diversity laws, specifically Senate Bill 826 (gender) in 2018 and Assembly Bill 979 (underrepresented communities) in 2020, both of which required minimum numbers of directors on boards identifying as women and underrepresented minorities, respectively. Other states followed California and passed board diversity laws (e.g., Washington’s “comply or explain” gender diversity law and New York’s gender diversity disclosure law). However, both California laws are not currently being enforced due to 2022 court rulings that deemed them unconstitutional, and such court rulings have had a cooling effect on diversity laws gaining more traction among other states. Certain states have taken a more incremental approach and passed non-binding resolutions to encourage, but not mandate, board diversity goals and disclosures.
In December 2024, the Fifth Circuit struck down Nasdaq’s 2021 board diversity listing rule. That rule required Nasdaq-listed companies to disclose standardized board diversity statistics — including aggregated gender, race/ethnicity and LGBTQ+ metrics — in a prescribed matrix format and to meet certain diversity disclosure objectives or explain why they did not. Nasdaq chose not to appeal. As a result, Nasdaq-listed companies no longer need to include the diversity matrix, and no listing rule requires them to meet or explain compliance with board diversity disclosure objectives. The New York Stock Exchange had never added a diversity disclosure rule so there was no equivalent requirement for NYSE listed companies.
In 2025, partly due to increased scrutiny of DEI practices in the United States, Institutional Shareholder Services (“ISS”) amended its board diversity policies. ISS announced it will indefinitely suspend the use of board gender and racial/ethnic diversity as a factor in making vote recommendations for director elections at U.S. companies. ISS will no longer recommend votes “Against” directors solely because a board lacks gender or racial/ethnic diversity. Instead, ISS voting recommendations on directors will focus on other considerations like independence, accountability and responsiveness.
Glass Lewis adopted a bifurcated approach to voting recommendations. While Glass Lewis will still provide a recommendation based on its original diversity voting guidelines, if it recommends votes against a director “related in any way to diversity,” it will include a “For Your Attention” flag “pointing clients to a supporting rationale they can leverage if their preference is to vote differently from the recommendation.”
Other large institutional investors followed suit. For example, BlackRock, State Street and Vanguard softened their board diversity expectations and shifted emphasis toward board effectiveness and composition aligned with strategy rather than rigid demographic thresholds.
Collectively, these changes reflect a broader market shift away from demographic requirements and toward a broader evaluation of board composition and effectiveness.
Link to Growing Anti-DEI Pressures Growing Anti-DEI Pressures
The recent executive orders signed by President Trump in early 2025 directly target DEI programs and have also indirectly impacted board diversity efforts. The orders aim to eliminate race- or gender-based hiring, training, and promotion practices in the federal government and among companies with any contracts with a federal government agency, and to require companies to certify to the agency that they “do not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws,” prompting corporations to scale back diversity initiatives and rethink board diversity disclosures.
Traditional board diversity has also come under fire from anti-DEI interests seeking to eliminate DEI metrics from consideration in board candidate selection. Anti-DEI groups and certain shareholder proponents have challenged diversity mandates in court and submitted shareholder proposals aimed at removing DEI-related criteria from governance processes.
Link to Disclosure Shifts in the Proxy Statement Disclosure Shifts in the Proxy Statement
These trends have heightened scrutiny of how companies describe diversity in proxy statements and how boards articulate candidate selection criteria.
According to an August 2025 Conference Board study, from 2024 to 2025, the number of companies reporting on board director race and ethnicity declined by 40% in the Russell 3000 and 32% in the S&P 500. This coincides with the fact that many issuers have eliminated demographic matrices.
Interestingly, despite the scrutiny on demographic-related diversity, a number of companies still reference board diversity in their proxy statements. However, they now define diversity more broadly to include diverse skills, backgrounds, experiences and viewpoints rather than focusing on protected-class metrics alone. Where companies have removed person by person demographic matrices, a number still include some more broadly defined metrics, like the gender split or the number of racial or ethnic minority directors. Age and tenure demographics continue to be routinely called out. While many companies have reduced the prominence of these disclosures, or paired them with expanded qualifications and skills, they continue to provide some demographic disclosure in answer to continued investor interest.
Link to Looking Ahead Looking Ahead
Board diversity disclosure has entered a new phase. In the current environment, companies should review and reconsider their board diversity disclosure to avoid attracting regulatory scrutiny or the focus of special interests while continuing to maintain transparent disclosure on board composition.
This article was republished by Harvard Law School’s Forum on Corporate Governance.