State regulator the New York State Department of Financial Services (DFS) has requested New York banks and other financial institutions to submit information relating to the gender, racial and ethnic composition of their boards and senior management by the autumn of 2021.
The regulator plans to publish the data on an aggregate basis a year later, in 2022.
The directive from the DFS was issued yesterday to banks with more than $100m in assets and non-depository financial institutions – which include the likes of asset managers, pension funds and loan providers – with revenues of more than $100m.
In a statement, DFS chief Linda Lacewell said that the initiative was the “best way” for the regulator to support diversity and inclusion efforts within the financial sector.
“Making this information public will allow firms to assess where they stand relative to their peers, and it is our hope, raise the bar for the entire industry. Transparency and accountability are driving forces for change,” she concluded.
Lacewell cited numerous studies which linked better diversity to financial outperformance as justification for the regulator’s push on the topic.
The move comes a few months after the DFS issued a similar request to New York insurers with more than $100m in insurance premiums. The regulator will also aggregate the data for publication in the autumn of 2021.
Earlier this week, research published by Regnan, the ethical investment arm of JO Hambro Capital Management, found that “focusing on diversity metrics without also looking at equity and inclusion can be counterproductive”.
According to the analysis, targeting diversity KPIs alone could result in minority groups being forced to “behave in inauthentic ways just to conform in environments which are indifferent or even hostile”.
“If they cannot contribute fully – and the business benefits of diversity fail to materialise – this can unfairly undermine confidence in those individuals and the groups they represent. This may also harm the general case for diversity, fuelling cynicism towards future efforts.”
Read RI’s recent report on ethnic diversity here.