The past few years have been a rollercoaster when it comes to diversity in the workplace. After a surge of interest in DEI following social justice protests in 2020, the Supreme Court last year overturned affirmative action while companies have been slowly walking back their diversity commitments.
And now, a new study shows some discouraging signs at the top of the corporate ladder when it comes to diversity.
Since 2018, the percent of self-reported racially diverse board members directors has risen five percentage points. But the share of new non-white directors fell from 45% to 36% between 2022 and 2023, according to data from The Conference Board/ESGAUGE, cited in a recent study by asset management firm Ariel Investments. Meanwhile, the percentage of those directors who believe their own board is racially diverse has also declined from 90% in 2021 to 81% in 2023, according to the company's survey of 165 Black, and Latino Fortune 500 corporate directors.
The drop in diverse corporate board members comes amid an increased pessimism about how much corporate America is investing into diversity initiatives. Although most of those directors surveyed say DEI is a primary boardroom agenda item, the share who believe their company is investing to support race equity and diversity goals fell seven percentage points between 2021 and 2023, according to the report. And around 37% of Black and Latino board members don't believe their board prepares leaders for effective oversight of DEI through a structured onboarding and training process. They also say discussions about DEI within the boardroom are less “thoughtful” and “balanced” than they were a few years ago, dropping from 84% who gave a positive review in 2021 to 78% in 2023.
Arielle Patrick, chief communications officer of Ariel Investments, says that although DEI remains a primary agenda item, the infrastructure required to keep it going is weakening. “It’s possible that the sharp increase of progress that took place after the murder of George Floyd—which built on several years of significant progress—may have leveled out due to companies feeling that the work had already been done," she says. "However, these efforts require significant financial and operational rigor to sustain in the long term—just as any other business imperative would."
DEI has been a major focus of the culture wars this year, with billionaires like Elon Musk and Bill Ackman coming out against it. And several companies including Lowe's, Tractor Supply, Ford, John Deere, Harley Davidson, and Jack Daniels have all walked back their inclusivity initiatives.
Moving forward, the report recommends ensuring that DEI goals are measurable, holding leadership teams financially accountable for progress, and specifically allocating capital to specific budget items. It also suggests updating stakeholders on DEI progress, educating employees, empowering representation for diverse board members on nomination and governance committees, and keeping DEI on the agenda indefinitely.
“What we're saying is you actually have to keep pushing, you have to keep reporting, you have to keep iterating,” says Patrick. “You have to keep it keep the operational infrastructure behind this, otherwise we will see a continued drop in representation.”
Sept 11, 2024: This story has been updated to reflect the source of data for self-reported racially diverse board members.
