Goldman Sachs Adjusts Director Selection Criteria
Goldman Sachs is eliminating considerations of race, gender identity, sexual orientation, and other demographic factors from the criteria used for selecting its board directors. This shift marks another step in Wall Street’s quick retreat from diversity mandates, indicating a broader reevaluation within corporate America.
The change followed pressure from the National Law and Policy Center, a conservative activist group with a minor stake in the bank. Goldman informed this group of its decision to drop the DEI (Diversity, Equity, and Inclusion) standards, resulting in an agreement where the group retracted its formal shareholder proposal. A vote on this new language is expected from Goldman’s board of directors this month.
This move goes beyond mere logistics. It implicitly challenges the philosophical basis of corporate DEI, which has traditionally involved considering demographic traits in hiring and promotions. For Goldman, a major player in the U.S. financial landscape, this decision is crucial and reflects a significant shift in consensus around diversity initiatives.
Goldman’s decision also comes during a time when legal and political challenges to DEI are intensifying. In 2023, the Supreme Court ruled in the case of Students for Fair Admissions vs. Harvard University that race-based admissions policies constituted unconstitutional discrimination, effectively ending decades of affirmative action jurisprudence. This ruling illustrates an increasingly adversarial approach to racial preferences that many corporate DEI programs are built upon.
Political pressure escalated during the Trump administration, which included an executive order preventing discrimination based on DEI among federal contractors. For businesses working with the government, this shift poses new compliance risks and limits the potential for preferential treatment under ambiguous DEI initiatives.
Additionally, the Trump administration targeted large public companies like Goldman Sachs, directing federal agencies to identify and possibly investigate firms with “egregious and discriminatory” DEI initiatives. The executive order also permits the government to recommend litigation against the private sector and undertake regulatory enforcement against these corporate diversity efforts.
Goldman’s response to this changing landscape has accelerated significantly in the last year. Last year, the bank stepped back from actively supporting diversity on the boards of its publicly listed clients—a commitment that had previously functioned almost like an obligation for companies seeking Goldman’s investment banking services. They also altered their “One Million Black Women” initiative, removing explicit references to race from a program that aimed to invest in Black business and nonprofit leaders.
These aren’t just minor shifts. Goldman’s actions reflect a wider corporate shift. Many banks and large corporations that once promoted DEI are now dismantling those programs or modifying them for legal safety, particularly following the societal upheaval surrounding George Floyd’s arrest and subsequent protests in 2020. This reversal has significant implications for the American economy, moving away from what some call left-leaning notions of equity. However, critics caution that enforcement is essential, as companies can easily rebrand without genuinely abandoning DEI principles.
What once seemed inconceivable is now becoming a common practice: formally removing considerations of gender, ethnicity, sexual orientation, race, and other demographic characteristics from selection criteria.
Wall Street could feel the effects most acutely. Goldman has historically leveraged its investment banking power to impose diversity requirements on publicly traded firms, suggesting that these expectations may have been misguided. As a cultural leader in the financial sector, Goldman’s policies often influence the broader Wall Street landscape.
