CA bill would require real estate boardrooms to increase diversity

The California legislature passed a bill Monday that if signed into law would compel AECOM, Douglas Emmett and other real estate companies to include racial minorities or LGBT individuals on its board of directors.

Lawmakers revived Assembly Bill 979 this legislative session (a measure first introduced in February 2019) amid a national reckoning with race relations following the death of George Floyd and other Black people at the hands of police. Many industries have taken a look at their hiring and representation practices, including real estate, which is still dominated by white men.

AB 979 follows in the footsteps of 2018 legislation that required publicly traded companies based in California to have at least one woman on their boards.

Gov. Gavin Newsom has not signed the bill into law nor indicated his stance on the measure. A message left with the governor’s office Wednesday was not returned.

Under the original version of AB 979, all California-based publicly traded companies would be required to have one nonwhite person on their boards by the end of 2021.

The bill was amended in a Senate Appropriations Committee debate last month to broaden the requirement to “underrepresented community,” which the bill defines as “Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaskan Native, or who identifies as lesbian, bisexual, or transgender.”

Since most corporate board members do not publicize their sexual identity or gender history, it is unclear what companies would be legally required to make changes. However, a July report by the Latino Corporate Directors Association shows that 233 of the 662 publicly traded companies in California, or 35 percent, have all-white boards.

These include 14 companies in the real estate sector, such as construction and engineering giant AECOM, L.A. County’s most prolific construction firm.

Also affected would be Douglas Emmett, one of the biggest and most active REITs in the area.

Other real estate companies with all-white boards and market caps of greater than $1 billion are: American Homes 4 Rent, an Agoura Hills-headquartered investor in rental homes, Sabra Health Care, an Irvine-based commercial real estate investor, and PS Business Bark, a Glendale based, office REIT.

PS Business Park referred to a public filing in which the company indicates it has fulfilled current and potential state diversity requirements. Messages left with other companies Wednesday were not immediately returned.

The bill’s sponsors, including Assemblymember Chris Holden of Pasadena, have described it as a way to curb all-white boards in Silicon Valley. But the Latino Corporate Directors report finds all-white boards are not specific to one industry, with companies from Monster Beverage to Chipotle Mexican Grill making the list.