Goldman Sachs drops IPO diversity requirement amid legal and political scrutiny

Goldman Sachs’ move comes amid a broader trend of corporate DEI policy adjustments, especially following the election of President Donald Trump, whose administration has been more sceptical of diversity mandates.

Goldman Sachs has rescinded its policy requiring companies to meet board diversity criteria before leading their initial public offerings (IPOs), reflecting the increasing legal and political scrutiny surrounding corporate diversity, equity, and inclusion (DEI) initiatives, The Financial Times reports.

Goldman’s initial commitment to board diversity

In 2020, Goldman Sachs announced that it would only underwrite IPOs for US and Western European companies that had at least one diverse board member, defined as a non-white male. The following year, it strengthened this requirement, mandating that companies must have at least two diverse directors, one of whom had to be a woman, The Financial Times notes.

This policy was part of a broader push to increase diversity in corporate leadership, as major financial institutions encouraged businesses to adopt more inclusive hiring and governance practices.

Legal challenges lead to policy reversal

Goldman’s decision to drop the requirement follows a US court ruling that struck down Nasdaq’s rule mandating companies disclose board diversity data and maintain diverse boards. Citing these legal developments, the bank stated: "As a result of legal developments related to board diversity requirements, we ended our formal board diversity policy", The Financial Times reports.

Despite the reversal, Goldman maintains that diverse boards are beneficial for corporate governance and performance, emphasizing that it will continue to encourage, but not require, diversity in boardrooms.

Goldman Sachs’ ongoing DEI commitments

Even though the formal requirement has been dropped, Goldman Sachs continues to support diversity initiatives internally. The firm has a dedicated team focused on helping companies identify and recruit diverse board members and remains committed to fostering inclusive corporate leadership, The Financial Times reports.

A broader trend of DEI rollbacks

Goldman Sachs’ move comes amid a broader trend of corporate DEI policy adjustments, especially following the election of President Donald Trump, whose administration has been more sceptical of diversity mandates. Many firms are reassessing their DEI commitments due to increasing legal challenges and political opposition.

As companies navigate the changing legal landscape, the rollback of mandated diversity policies underscores the complex challenges businesses face in balancing inclusivity with regulatory compliance, The Financial Times reports.