California First Lady: Why women in leadership is better for business

First Partner of California Jennifer Siebel Newsom sits down with Yahoo Finance Live to discuss the importance of directors boards to include women, California legislation on gender-inclusive public company boards, and gender pay inequity.

Video Transcript

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RACHELLE AKUFFO: Welcome back to "Yahoo Finance Live." A report mapping women's representation on California's public company boards by region and industry shows the strides being made and the ongoing disparities. For more on this, Emily and I are joined by Jennifer Siebel Newsom, First Partner of California and California Partners Project Co-Founder. Thank you for joining us. Now data from CPP--

JENNIFER SIEBEL NEWSOM: Thanks for having me.

RACHELLE AKUFFO: --shows that by-- yes, I'm so glad you were able to join us today, especially on International Women's Day.

JENNIFER SIEBEL NEWSOM: Yes.

RACHELLE AKUFFO: Now data from CPP shows that by industry sector, the greatest gains in board seats held by women are in the energy and utilities sector, entertainment and retail sector. The laggards, though-- agriculture, restaurants, and financial services. What makes some sectors more progressive in getting more women on boards?

JENNIFER SIEBEL NEWSOM: That's a great question. So what we found is that historically, board recruitment has been done through insular networks without intentionality. And actually, we're coming out with a playbook in partnership with my alma mater Stanford University that is going to provide these best practices when it comes to intentionality in board recruitment because, again, we know that--

And this is the tragedy here. Because of the insular networks, the misperceptions of risk associated with bringing on women, there's an unconscious bias. And, in fact, when recruiting takes place, if there's no intentionality, we find that we often set the bar higher for women and lower for male recruits.

EMILY MCCORMICK: And I'm wondering as well, what do you think needs to be done? What factors are you still seeing as being hurdles for women getting to that point where they'd be recruited for boards in the first place? I'm thinking early mid-career. What do you think needs to really be done to empower and uplift at that point in those stages of a career?

JENNIFER SIEBEL NEWSOM: Well, obviously, we need not just mentorship opportunities but sponsorship. But you also need laws like SB 826, which actually has completely transformed the landscape when it comes to women on public company boards in California. Three years ago, we had 30% all-male boards. And as of this past December, we now have only 1% all-male boards.

There are so much proof that having women in leadership is actually better for business. There's greater creativity, productivity, and a better bottom line when you have women in leadership in the highest positions in business not just in our state but in our country. Remember, California is the fifth largest economy in the world. So the decisions that are made in these company boardrooms reverberate not just throughout the company but in their communities and across society.

RACHELLE AKUFFO: And for people who aren't familiar with it, SB 826 requires all public companies headquartered in California to include women on their boards of directors. How are companies responding to this? You mentioned the number that we've seen. How do the companies actually feel about taking this on?

JENNIFER SIEBEL NEWSOM: I mean, it's been a win-win. It's so exciting. Like I said, we only have 1% all-male boards currently in California. And this is a competitive advantage. And so I'm really proud of California because as California goes, so can go the country.

Look, we're at an inflection point in our country. Not only are we in the, you know, hopefully, the endemic period of a pandemic, but we are in an economic crisis. We have a climate crisis. We're at an inflection point.

And it's incumbent upon us all to recognize that women haven't had seats to the tables of power. And so this is an opportunity not just for California but for our country to follow suit and see the power and the profitability, not just the economic profitability but the benefit to the environment and the benefit to the employee base in the community when you have more women in leadership on corporate boards.

EMILY MCCORMICK: And thinking about not just public company board seats but the US Labor market composition overall. Now prime age labor force participation rate for women was at just under 76% in February. It was at nearly 89% for men.

Now we've been talking a lot over the course of the pandemic about how childcare concerns, school reopenings, and closings have been keeping women on the sidelines. Is this what you're seeing? Or what other factors have been at play here? And what can be done?

JENNIFER SIEBEL NEWSOM: Well, look, we don't-- the big thing that I'm focused on in California is pay inequity. Here in California, we actually have the strongest pay laws in the nation. And we're trying to close that pay gap.

In California, unfortunately, women still make $0.88 to the man's $1. And what's even worse, though, is for women of color, Black women make $0.59, Native American women, $0.57, and Latina women, $0.55. And so California women lose collectively $87 billion a year to the pay gap.

And we know that if that money is in their pockets, they're going to invest in their families. They're going to give more philanthropically to their communities, and they're going to contribute to the economy. And we were doing that in record numbers prior to the pandemic.

And so we really have to focus on pay equity and closing that pay gap. And that's why I launched Equal Pay CA in 2019 when we came into office to basically turn the strongest pay laws in the nation into the smallest pay gap in the nation. And it's critical that we really hone in on that right now in California and across the country and around the world. Because of the pandemic, it's critical that we all build back stronger together. And that means centering women's pay.

RACHELLE AKUFFO: And that also brings into focus this new bill aimed at shrinking California's gender and racial pay gap through pay transparency. Now this would force companies to share their wage data publicly. Why this approach? And are you worried about any pushback? As we have seen some companies like Tesla start to move away from California for varying reasons. But is there a concern that that might push potentially more companies away?

JENNIFER SIEBEL NEWSOM: So you know what? There's some myth of this mass exodus of California businesses. The CEO, like Elon Musk, may move to protect his own assets. But the workforce is still here. Tesla is still here. So actually, California public companies are increasing in number.

And, again, I'm really proud of California because I think that California is leading the nation when it comes to pay equity and women's representation on corporate boards. And so we're just continuing to hone in and try and close those gaps of inequalities and underrepresentation so that we can really inspire the rest of the nation to follow suit.

RACHELLE AKUFFO: We do appreciate you taking the time to join us today. Jennifer Siebel Newsom, the First Partner of California and California Partners Project Co-Founder, thank you for your time today.