Diversity in the boardroom

Diversity in the Boardroom, a Look at America’s Largest Companies

Fulcrum Partners Fulcrum Partners News

ISS Corporate Solutions, Inc. (ICS), a provider of compensation, governance, and sustainability tools and advisory services to help companies improve shareholder value and reduce risk, published the results of its recent analysis of diversity in the boardroom of S&P 500 companies. The report covered the period from July 1, 2020, to May 19, 2021, and showed that 54 percent of newly appointed directors were white while 32 percent were black.

These numbers represent a significant increase in the diversity of board appointees tracked just one year previously. Between July 1, 2019, and May 19, 2020, 77 percent of appointees were white and 12 percent were black. Additionally, the rate of diversity increase is most pronounced at larger companies, according to the ISS study.

Marija Kramer, Head of ISS Corporate Solutions, observed, “The needle has clearly moved as companies respond to the chorus of investors and other stakeholders who since last summer have called for greater racial and ethnic diversity within corporate boardrooms.” (Source: Number of Black Director Appointments Grows Exponentially at Large U.S. Companies)

Why Diversity and Inclusion Matters

Beyond being a positive and morally responsible social action, a developing board with gender and racial diversity is often a solid business move. When board member decision making is underpinned by variety in experience and perspective, board actions are more likely to be broad thinking and better positioned to respond to consumer and shareholder issues.

As Larry Fink, Chair and CEO of BlackRock wrote in this open letter to CEOs, January 2018, “Boards with a diverse mix of genders, ethnicities, career experiences, and ways of thinking have, as a result, a more diverse and aware mindset. They are less likely to succumb to groupthink or miss new threats to a company’s business model. And they are better able to identify opportunities that promote long-term growth.”

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