Nearly half of leading brands lack timeframe for diversity on boards
A lack of diversity in gender, race, ethnicity and other demographics is an enduring problem across the executive and board levels of “leading” brands, according to a new survey by the New York Stock Exchange and software company, the Diligent Institute.
The report, “ Impossible Until it’s Done: Corporate Board Diversity and Refreshment Practices”, released on October 19, surveyed 475 respondents over a period of five weeks, 251 of which were corporate directors, top executives, or other senior staff within leading brands.
According to the report, while four out of five respondents (81%) indicated that their board either has a plan for increasing boardroom diversity or will have one soon, nearly half (45%) lacked a specific timeframe for meeting diversity goals. For those who have set a timeframe, 35% stated they would implement a plan over the next one to three years.
The report follows a rallying call from senior in-house attorneys, including JP Morgan Chase, BNP Paribas, Goldman Sachs and Bank of America, from the financial services sector earlier this month, who committed to better promoting D&I across the legal sector.
In an open letter, the general counsels unveiled a number of commitments and called on law firms and leading brands to support these D&I aims, as well as meeting their expectations related to diverse staffing, including at board level.
Survey: ‘What are your timeframes for D&I goals?’
The Diligent Institute survey primarily sought answers to the following questions: what goals are companies setting around board diversity?; what are the timeframes within which companies plan to achieve their board diversity goals?; which board refreshment strategies have companies already implemented?; and how likely are companies to implement other board refreshment strategies in the future?
When asked about the measures taken to promote D&I on boards, 17% of respondents said they limit the number of board positions a director may hold, 14% have implemented board member age limits, and 11% have added board seats to increase D&I.
However, the survey showed that only 8% of respondents have implemented director term or tenure limits, 6% have asked long-tenured directors to retire or resign, 4% have created diverse-only slates of board candidates, and a mere 3% have set diversity quotas or targets.
The report noted, however, that brands had made progress in creating more transparency around D&I data, with 14% of respondents reporting that they disclosed data on board diversity. “This is a notable step toward greater transparency for board composition,” said Dottie Schindlinger, executive director of the Diligent Institute.
When asked to rate (on a five-point scale) their companies’ likelihood to implement board refreshment strategies in the future, respondents indicated they were more likely than not to implement three of the strategies shown to help increase diversity.
These included: disclosing board diversity data (3.78), working with search firms and groups, specialising in diversity (3.26), and creating diverse-only slates of board candidates (2.61).
However, respondents were less likely to favour considering imposing limits on director terms or tenures (2.3), asking directors to retire/resign (2.2), or implementing diversity quotas (2).
The survey follows the launch of the NYSE Board Advisory Council in May last year to address the need for inclusive leadership by connecting diverse candidates with companies seeking new directors.
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