Activism for change is blossoming throughout our society today, and we have hope that real progress will finally be made in areas of diversity, equality, equity, inclusion, and gender and racial justice. Discrimination and injustice are not only being confronted on the streets of our cities and in government and courts, but also in the boardrooms of corporations.
A movement to increase gender and ethnic diversity on corporate boards is gaining speed, yet we still have a significant distance to go. For many years, corporate boards acted behind closed doors and in rarefied C-suites that were dominated by white men. White men still comprise the majority of boards today, but movement toward greater diversity in the boardroom is definitely underway. And that diversity will bring a greater focus on issues and policies of social justice and the role a company must embrace to effect meaningful change, both internally and externally.
For many years, I have been a member of a national activist group pushing for more women on boards. Our original goal was 20% by 2020 and while we are proud that we reached that goal, it’s obviously not good enough — not when women make up 51% of the population. Meanwhile, racial and ethnic diversity on boards remains depressingly low. Women of color represent only 5% of seats on corporate boards, while all people of color make up only 20% of board members at S&P 500 companies.
New initiatives. However, progress can be seen in the appointment of new board members: According to the US Spencer Stuart Board Index, 59% of new directors in 2019 were diverse (defined as women and minorities), while 74% of first-time directors were diverse, and 69% of next-generation directors were diverse. Meanwhile, some states are spurring change with legal mandates. In California, every public company in the state must have at least one female director, and that ratio will increase over time. Colorado, Maryland, Illinois and New York have also enacted board diversity measures, and other states are considering such laws.
Extensive impact. This movement is critical because of the immense impact that corporations have on people’s lives and on our institutions. At the most basic level, work is the underpinning of our society, and often of our personal and family lives, so fairness and inclusion in the workplace and workforce are vital to each of us who works. Board directors oversee workforce and workplace policy at most of the nation’s largest employers.
Policies that empower. Corporate directors also influence the utilization of company resources for social responsibility initiatives — which these days often target social justice issues as well as diversity, equality, equity and inclusion. Directors can guide company policies that include empowering team members to take part in community volunteerism, advocacy groups, and even protests against racial and other social injustices; they can also advocate for internal employee groups focused on equality and change. When making decisions about strategy and action on social responsibility, or about supporting and investing in community initiatives, diversity among corporate decision-makers is essential.
Varied mindsets. More directors are recognizing that companies themselves benefit from board diversity. It results in a wider range of viewpoints, perspectives and backgrounds that expand the understanding of strategic and operational issues that companies face. A diverse board can help companies better understand the needs of the communities where team members live and work and the problems they face in our society. Diverse boards better reflect a company’s stakeholders — team members, clients, suppliers and shareholders — to provide enhanced insights and understanding about all of a company’s constituencies.
Corporations are powerful agents of positive change locally and globally, and they can take direct action to help address immediate wrongs, including social injustice, and to redirect long-range company and public policies. In doing so, they can better support their team members, who are the most critical factor in company performance, and their clients, customers, and suppliers. Corporations can and must also strive to do the right thing. Direction and governance from the top matters, and that is why improving diversity on boards of directors is essential to ensuring corporations are living up to their purpose of making a positive impact in this world.