July 18, 2022
Board Diversity: Progress on Racial & Ethnic Diversity?
Cooley’s Cydney Posner recently blogged about on whether companies are making progress in efforts to improve the racial and ethnic diversity of their boards. She cites ISS data indicating that while progress has been made, companies still have a long way to go. Here’s an excerpt from Cydney’s blog on where things stand with the S&P 500:
ISS reports that, in 2022, all boards of companies in the S&P 500 had at least one director that identified as racially or ethnically diverse; in comparison, in 2020, 11% of boards in the S&P 500 had no racially or ethnically diverse directors. In addition, in 2022, 36% had three racially or ethnically diverse board members, compared to 22% in 2020. Similarly, in 2022, 31% had four racially or ethnically diverse board members, compared to only 7% in 2020—an increase of 24 percentage points. The percentage of board seats held by racially or ethnically diverse directors grew from 19% in 2020 to 23% in 2022.
There were, however, differences among different races and ethnicities. For example, persons identifying as Hispanic/Latin American constituted up 18.5% of the U.S. population (according to the April 1, 2020 census), but held only 4% of S&P 500 board seats in 2020 and only 5% in 2022. African-Americans held 9% in 2020 and 12% in 2022; Asians held 5% in 2020 and 6% in 2022.
Russell 3000 companies have also made some progress. The good news is that in 2020, 38% of Russell 3000 companies had no racial or ethnically diverse board members, but that only 10% lacked racial or ethnically diverse directors. The percentage of companies with two or more racially/ethnically diverse directors rose from 29% in 2020 to 55% in 2022 & the percentage of board seats held by racially or ethnically diverse directors grew from 11% in 2020 to 16% in 2022.
Despite this progress, ISS says that diversity efforts still have a long way to go if boards are to “reflect the diversity of their customer base or the demographics of the broader society in which they operate.” It also points out that the long-term trajectory of board diversity initiatives remains to be seen.
– John Jenkins