Racial diversity has become one of the most pressing agendas in boardrooms, Listens to DealBook. Underrepresented ethnic and racial groups make up 40 percent of the U.S. population, but only 12.5 percent of the board members of the 3,000 largest listed companies, up from 10 percent in 2015, writes The Times Peter Eavis. Black board members make up 4 per cent of all board members, compared with 13 per cent of the population.
“This is the unique topic of governance discussions,” Daniel Wolf, a partner at law firm Kirkland & Ellis, told DealBook, adding: “Boards will try to get ahead of it.”
“This seems like a completely different time than the other times black men were killed by the police,Said Ursula Burns, a former CEO of Xerox who is director of Exxon, Nestlé and Uber. She is leading the Board Diversity Action Alliance to help companies add Black Directors, an organization that has Dow, Mastercard and UPS among its supporters. A similar initiative, Board Challenge, counts Merck, United Airlines and Verizon among its members.
• “You can not look your stakeholders in the eye and say, ‘It does not affect us, we are color blind, we do not need to make changes,’ ‘said Rebecca Thornton, director of directorial consulting at JPMorgan. has received from clients this year asked for people in color, she noted.
Shareholders – and regulators – follow. When large institutions put pressure on companies to put women on the boards a few years ago, it had a measurable impact. Now some of these forces are focusing on racial diversity, hence the warnings about the price of passivity. The evidence of stronger financial returns at several different companies also helps.
Who does what:
• California passed a bill last month requiring listed companies headquartered in the state to have board members from underrepresented communities.