US boards still far whiter than overall population

Diversity push making more public firms transparent on racial breakdown

NEW YORK — Amid the push to get U.S. boardrooms to look more like companies’ customers and employees, advocates are finally seeing just how steep the task will be.

Boards of directors at publicly traded U.S. companies are much more white and much less diverse than the overall population, often starkly so. Just 2.7% of directors at the start of the year were Hispanic, for example. That would need to soar to 18.5% to mirror the U.S. population.

Outside of looking at a photograph of each director, it hasn’t always been easy to measure racial diversity on corporate boards. On Thursday, executive data firm Equilar released its first racial breakdown of boards for companies in the Russell 3000 index, which covers about 97% of all investable U.S. stocks.

The survey found only 6.2% of directors are Black, versus 13.4% of the country. And the 5% of directors who are of Asian or Pacific islander descent also fell short of the 6.1% for the entire U.S. population.

Equilar pulled the numbers from a range of sources, including company disclosures, data from affiliate networks and lists of influential executives from racial and ethnic minorities. Its results are similar to the disproportionate representation found in other surveys of more limited groups.

Executive search firm Heidrick & Struggles earlier this week released its roundup of boards at a smaller group of companies, those in the Fortune 500. It found that Black directors hold 26% of board seats, while Asian or Asian American directors had 9% and Hispanic directors held 6%.

Bigger companies tend to have more diverse boards than smaller companies. But more across the board are being transparent about the racial breakdown for their board of directors. A big reason is because they’re being forced to do so, with pressure coming from stock exchanges, regulators and investors.

At the Nasdaq, for example, a listed company will be required as of Aug. 7, 2023, to either have at least one director considered “diverse” or explain why it doesn’t.

Investors are making similar pushes, arguing that more diverse boards lead to more points of view and better decision-making. They want boards to look more like their employees and customers, which are increasingly diversifying along the country’s trends, to better understand them.

“If you’re an investor, you’re looking for ways that companies can outperform,” said Ann Miletti, who is both chief diversity officer and head of active equity at Allspring Global Investments. “We generally agree that the more diversity you have on your board, the better performance that you’re going to get in the long run.”

The push for more racial and ethnic diversity on boards follows years where the focus was mostly on gender. Thursday’s numbers from Equilar show how women from racial and ethnic minorities are among the least represented on boards. Just 0.9% of U.S. directors are Hispanic women, for example, half of the already low 1.8% for Hispanic men.