The US Securities and Exchange Commission approved a proposal from stock exchange operator Nasdaq Inc that requires its listed companies to have diverse boards, or explain why they do not.

The proposal requires that companies have two diverse directors, including one who identifies as female and another as an underrepresented minority or LGBTQ+, or explain why they do not. Companies also have to publicly disclose the diversity of their boards.

“These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity,” said SEC Chair Gary Gensler in a prepared statement.

Nasdaq said it is looking “forward to working with our companies to implement this new listing rule and set a new standard for corporate governance”.

Women and minorities have been underrepresented in the top ranks of companies, leading to a recent reckoning on racial and gender diversity in Corporate America. According to data from Equilar, boards in the Russell 3000 are halfway to gender parity.