Diversity: Are top firms boasting and not doing?

Diversity: Are top firms boasting and not doing?

Executive Grapevine
Executive Grapevine | Executive Grapevine International Ltd

Whilst big companies proudly declare their intention to diversify the makeup of Boardrooms, less than half are willing to disclose how they’re actually doing – The Street reports.

Equilar, a provider of Board intelligence solutions, conducted the study, which found that only about 45% of the largest US companies disclose the composition of their Board by gender. An even smaller number, 40%, disclose the ethnicity of their directors. Yet, according to the study, about 60% of firms says they consider gender and ethnicity when assessing director candidates.

Whilst it appears that all industries are boasting about how they plan to implement genuine boardroom diversity, the industry’s most likely to disclose the makeup of their boardroom are industrial goods and healthcare. The sectors least likely to disclose the makeup of their boards were basic materials and consumer goods.

Whilst in US law it is currently not required for Boards to release the makeup of their Board, Belen Gomez, Senior Director of Board Services at Equilar believes that more needs to be done to engage with the subject.

She says: "Shareholders and other observers have only company disclosure to reference when seeking information about Board diversity, and the more transparency we see on this critical topic, the more it will drive others to engage.”

Susan Angele, Senior Advisor, KMPG Board Leadership Centre, agrees. She says: "As disclosure of these facets of diversity becomes more common, the amount of research confirming the association between Board diversity and long-term value is likely to increase.”

Yet, presently, there are a paucity of ethnic minority candidates in boardroom positions, according to research by Executive Search and Interim Management provider Green ParkNearly six in ten Boardrooms don’t have an ethnic minority presence despite companies becoming increasingly vocal, and the number of studies increasing, about the benefits of C-Suite diversity.

A recent study by Peterson Institute for International Economics revealed that a female presence in corporate leadership will improve a company’s performance. Meanwhile, a 2015 McKinsey report found that companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.

The evidence is clear: if a company is shouting about Boardroom diversity, they should probably act on it too because the benefits are becoming patently obvious.

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