Board directors have a harder time than ever doing their job to steer companies during the current complex times of change. Board agendas are crowded with a myriad of issues from cybersecurity to talent retention to supply chain challenges to ESG concerns. And calls for greater diversity and inclusion on boards are increasing in volume as companies compete for greater performance. To successfully scale these hurdles companies, require effective boards which are independent and reflect both diversity of the personal characteristics of race and ethnicity and the diversity of skill, experience, and opinion.
And yet the Spencer Stuart 2022 S&P 500 Board Diversity Snapshot paints a mixed picture of the efforts to achieve diversification on corporate boards. While 72% of the incoming S&P 500 class of directors come from historically underrepresented groups, when you look at the broader picture only 22% of all S&P 500 directors are BIPOC. The study points to “persistent low boardroom turnover” as the reason the addition of these new directors has had such a low effect on the overall diversity.
There are major disadvantages to not having a diversified board. Given changes in SEC reporting rules and new racial equity audits, companies are now facing public scrutiny when non-compliant. This can put them at a disadvantage at a time when investors are becoming more and more judicious with their money.
As institutional investors focus on accelerating equity at the board level, influential proxy advisor Glass Lewis added a board diversity requirement to its voting guidelines. Stating in its latest advisory that it “will generally recommend voting against from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members.” In another prime example, in 2021 BlackRock voted against 130 boards due to a lack of ethnic and gender diversity. On a positive note, the footprint of ESG-focused funds is growing as they topped $1 trillion for the first time, according to data from Morningstar.
A BCG survey supports the wisdom of this trend. In 2017, it found that “companies with more diverse leadership teams report higher innovation revenue” — a difference of 45% to 26%. It is clear that BIPOC Boards add value and enhance financial performance. What is more, inclusivity at the top levels serves to promote equity throughout the company.
It’s no secret that companies can accelerate growth when they are guided by boards that are diverse in backgrounds, perspective, and experience. As part of our services, TAKE YOUR SEAT provides executive leadership training and one of the largest directories of board caliber Black candidates. By actively working to increase the number of Black directors in the boardroom now, we are helping public and private companies accelerate equity as their new competitive advantage.
SAVE THE DATE / SAVE YOUR SEAT
Beginning January 2023, TAKE YOUR SEAT will present BOARDView, a highly experiential leadership training for Black professionals to elevate their understanding of board service. Join us for this 12-hour program geared to help you fulfill your aspirations for board service. For more information and to Save Your Seat, click here
About Jerusha Stewart: Jerusha is a mission-focused entrepreneur creating opportunities for a more equitable future. With a vast background in law, sales, public relations and marketing, Jerusha is well-versed in creating innovative problem solving initiatives and implementing successful communication strategies. Most recently, Jerusha has dedicated herself to her latest mission, Take Your Seat, a Public Benefit corporation focused on recognizing the wealth of global Black talent and accelerating inclusivity in corporate boardrooms to maximize corporate performance.
Jerusha Stewart - CEO, Take Your Seat
Equity Accelerator - "The only way to make change, is to take action."
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