DE&I round-up: Minority directors hit 20% on US board seats for first time

In an analysis of 3000 US companies, racial and ethnic minorities comprised 20 percent of all board directorships for the first time, according to research by ISS Corporate Solutions. The analysis – which covered a four-year period from January 2019 to January 2023 – showed that directorships filled by black individuals increased by 90 percent during the period, with 8.3 percent of seats now being filled by black directors. It also found that Asian directors saw a 55 percent increase in directorships, while Hispanic and Latin American individuals saw a 37 percent increase. Seats held by Middle Eastern and North African directors grew by 38 percent, and Native American, Alaskan Native and Native Hawaiian representation grew by 33 percent. The proportion of Caucasian directors fell by 9 percent, however they still hold around 80 percent of board seats.

New York State comptroller Thomas DiNapoli has announced a series of shareholder proposals as part of the New York State Common Retirement Fund’s push to increase corporate accountability for DE&I issues. The shareholder proposals cover racial equity audits, workforce DE&I reporting, healthcare equity, and discrimination and harassment disclosure. The fund said it will vote against any Russell 1000 companies where board nominees have no board directors identifying from an underrepresented minority. It will also vote against nominating committee nominees where a board has just one director identifying as an underrepresented minority, as well as at companies that do not disclose the individual racial diversity of their directors, or where companies do not explicitly consider gender and racial diversity in their search for directors.

New York City comptroller Brad Lander also co-filed two of the above shareholder proposals on behalf of the NYC Retirement Systems, asking for companies to publicly report on the outcomes of their efforts to prevent harassment and discrimination and hold employers accountable.

Superannuation fund HESTA has called on the Australian government to address retirement system inequities in this year’s budget. The super fund’s CEO, Debby Blakey, described the gap as the “motherhood penalty”, where women are financially disadvantaged because of taking time out of the workforce for childcare reasons. She added that the upcoming May budget is an opportunity for the government to improve women’s financial security in retirement.

This comes as the UK’s Department for Work and Pensions also recently announced that it was considering implementing regular reporting on the gender pension gap. Pensions minister Laura Trott said that the government is looking to understand the scale of the gender pension gap by working with stakeholders.

The Investment Association has said that DE&I will be one of its four areas of focus this year in its shareholder priorities report for 2023. Climate change, stakeholder engagement and audit quality will also feature in its Institutional Voting Information Service, which will analyse the issues for financial years ending on or after 22 December 2022.

The IA plans to increase its diversity targets for FTSE 350 companies for 2023 by using a “red-top” approach to flag strong areas of concern. Companies where women represent 35 percent or less of the board – or 30 percent or less of the executive committee – will be considered a high concern, along with FTSE Small Cap companies where female representation is 25 percent or less of the board or of the executive committee. The IA will also assess whether companies are meeting the Financial Conduct Authority’s new ruling for disclosure on whether one of the four senior board positions is held by a woman. It will continue to flag FTSE 100 companies which do not have at least one director from an ethnic minority background as “red-top”, and FTSE 250 firms that do not disclose either the ethnic diversity of their board, or a credible action plan to meet the Parker Review targets by 2024 will be labelled as “amber”.