California’s governor signed a bill into law on Wednesday that requires publicly traded companies headquartered in the state to have at least one board member from an “underrepresented community” by the end of 2021.

The legislation defines “underrepresented” as a person who self-identifies as Black, Hispanic/Latino, Asian, Pacific Islander, Native American (including Native Alaskan or Hawaiian) or an individual who self-identifies as gay, lesbian, bisexual or transgender.

“The new law represents a big step forward for racial equity,” California Assemblymember Chris Holden, who co-authored the AB 979 bill, said in a statement. “While some corporations were already leading the way to combat implicit bias, now, all of California’s corporate boards will better reflect the diversity of our State.”

Holden called the new law a “win-win as ethnically diverse boards have shown to outperform those that lack diversity.”

Assemblymembers Christina Garcia and David Chiu, who co-authored the bill with Holden, echoed Holden’s sentiments after the bill was signed by Gov. Gavin Newsom.

Garcia said that it is “clear we can no longer wait for corporations to figure it out on their own.”

“I’m excited this bill is signed and look forward to California continuing to lead the way in our fight for racial equity in general,” she added in a statement.

Chiu, who is also the chair of the Asian Pacific Islander Legislative Caucus, noted that the new measure “recognizes that including the perspectives of underrepresented groups in leadership roles will result in more innovation, improved productivity, and better economic outcomes.”

The new legislation also requires corporate boards in California to include two directors from underrepresented communities if their board has more than four members and three directors from underrepresented communities if their board has more than nine members by the end of 2022.

The police killing of George Floyd at the end of May sparked a new push for racial equity in the U.S., especially in the private sector. Many companies that publicly pledged support for the Black Lives Matter movement in the wake of the protests that erupted across the nation faced renewed scrutiny over diversity statistics, especially among leadership positions.

White board members made up 83.9% of total board seats on Fortune 500 companies in 2018, according to a report from Deloitte and the Alliance for Board Diversity. Black board members accounted for just 8.6% of those seats, Hispanic/Latino members just 3.8% and Asian/Pacific Islanders just 3.7%.

Separately, earlier this month, more than a dozen companies across the nation signed onto the “Board Challenge,” pledging to add a Black director within the next year.

In June, Reddit co-founder Alexis Ohanian announced he resigned from his company’s board to make room for a Black business leader to take his place.

“I believe resignation can actually be an act of leadership from people in power right now,” Ohanian wrote on Twitter at the time. “To everyone fighting to fix our broken nation: do not stop.”

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