The New York Times reports that despite pledges by many US corporations to increase the diversity of their boards, on the three thousand largest publicly traded companies these boards "remain overwhelmingly white. Underrepresented ethnic and racial groups make up 40 percent of the U.S. population but just 12.5 percent of board directors, up from 10 percent in 2015, according to a new analysis by the Institutional Shareholder Services’ ESG division."
The story goes on: "Black directors make up just 4 percent of the total, up from 3 percent in 2015, while Black women make up just 1.5 percent of the more than 20,000 directors included in the analysis, which goes beyond other surveys that included only the 500 largest public companies."
Why this matters: Boards of directors, the Times writes, "make decisions that affect the livelihoods of millions … Board members have a lot of power because they are ultimately responsible for directing companies. A board approves a company’s strategy and most important goals, hires the chief executive and determines how much it will pay senior executives. A special board committee nominates new members and, as a result, has the power to make boards more diverse by seeking out candidates who are not white men."
The story notes that "a group of 44 executives and organizations last week announced the Board Challenge, a campaign that calls on companies to add a Black director within the next 12 months." In addition, "the California Legislature recently passed a bill that would require companies with headquarters in the state to have at least one board member from an underrepresented ethnic group, or who identifies as gay, bisexual or transgender, by the end of 2021." (Gov. Gavin Newsom has not said whether he will sign the bill.)
Institutional Shareholder Services’ ESG division, the Times notes, " advises investors on how to vote in board elections and on other corporate matters."