I tend to take the view that laws like this are attempts to reduce existing racism and sexism in corporate governance.
For example, and I'll link to an article for all of this at the bottom, Hispanic people are the biggest ethnic group in California, making up 39.4% of the state, but 83% of public companies boards have no Latino or Hispanic board member. Latino and Hispanic Board members make up 2.5% of the population of California board members of public companies, and in the 12 months from June 30 2020 to June 30, 2021, only 3.5% of new directors were Hispanic.
I don't think you get those kind of disparities in this day and age if board members are awarded entirely on merit. I think there are often many qualified candidates for any position, but historical and structural and cultural reasons often push people to hire people like themselves, thus perpetuating inequity.
Maybe you disagree, but at the very least it seems like board rooms don't reflect the state's population very well.
The article talks about people like the Chief Medical Officer at Merck becoming a board member now, and a Black division head at United Talent Agency with 40+ years of experience becoming a board member now. Not exactly people lacking experience and expertise, but not people who were being asked to serve on boards.
If corporations are people, and if a person was only hiring white men for a particular role at a company and not looking to hire equally qualified candidates who happened to be women or minorities, I would consider that the opposite of a meritocracy, and likely indicative of discrimination. And if that was what's happening, I don't think the problem was going to correct itself. If it was, I imagine it would have done so by now, or at least there would have been much greater progress.
Further, studies from Morgan Stanley and others linked in the article suggest that diversity is better for shareholders! If true, then these changes help pave the way for people who have more merit in terms of benefit to the corporation. I don't think diversity is some magic that makes companies run better, I think racism and sexism makes people ignore the value that people could bring in to a company in favor of choosing people more similar to themselves.
Corporations under these two laws have to have someone who is a woman and someone who is part of a minority community, and I believe they can be the same person, so it's not like white male board members are going to disappear just because a board seat or two is required to be more diverse.
A white male board member is almost certainly wealthy, so nobody is going hungry even if they lose a board seat, and boards can, I believe, just add additional seats, so nobody actually has to lose their position.
Ultimately it seems like this may make companies perform better, and promote racial and gender equity, and it doesn't cost taxpayers anything to make it a condition of a California corporate charter.
So what exactly is the real harm, when compared to the benefits?
https://www.reuters.com/business/sustainable-business/califo...