Public companies have made strides in increasing the diversity of their boards of directors in the face of pressure from multiple stakeholders, but according to a new analysis of board diversity, there’s still a long way to go.
The Conference Board (TCB) and ESG data analytics firm ESGAUGE conducted a comprehensive review of board composition, director demographics and governance practices at public companies in the United States for their report, Corporate Board Practices in the Russell 3000, S&P 500 and S&P Midcap 400: 2021 Edition.
The analysis, based on proxy statements and other organizational documents, finds that a majority of S&P 500 companies disclosed the racial and ethnic background of their board members in 2021 (59 percent), rising from just 3 percent that disclosed this information in 2016. Companies on the S&P Midcap 400 and Russell 3000 lag behind in this reporting, with 33 percent and 27 percent reporting, respectively.
While more companies are being transparent about the racial makeup of their boards, it remains the case that the majority of directors are white. On average, about 79 percent of board directors are white, among companies that disclosed this information, according to the report.
A few other notable findings:
- Boards are growing gender-diverse more rapidly than they are becoming racially diverse: An average of about one in three newly elected directors in 2021 was female, while an average of 11 percent were Black, 6 percent were Latino or Hispanic, and 3 percent were Asian, Hawaiian or Pacific Islander.
- IT sector companies have the most racially diverse boards: While they still make up the majority of board seats, white people account for 74 percent of board directors in the information technology sector, the lowest percentage of any sector. People of Asian, Hawaiian or Pacific Islander descent account for about 11 percent of board members in this sector, as do Black people.
- Few boards have no women members: About 7 percent of firms in the healthcare sector have just one woman on their boards, the highest percentage for this figure, while an average of one in three companies has three women directors on their board.
The report was produced in collaboration with Debevoise & Plimpton, the KPMG Board Leadership Center, Russell Reynolds Associates and the John L. Weinberg Center for Corporate Governance. Click here to download the report.