While the majority of Fortune 500 board directors say their companies still prioritize diversity, equity and inclusion (DEI) initiatives, progress at the board level is slowing, according to an Aug. 26 report from global asset management firm Ariel Investments.
Since the Supreme Court’s ruling on race-conscious college admissions policies, declines have been documented in several areas, including the number of directors of color recently appointed to boards, how often boards are focusing on race in operational and risk discussions, the amount of corporate capital committed to diversity initiatives, and the willingness of directors to boldly champion DEI in the boardroom, the report found.
“Many board members surveyed still feel their companies struggle to operationalize DEI goals effectively — with stagnation or modest improvement from two years ago,” according to the report.
In a survey of Fortune 500 board directors, 81% said they view their boards as racially diverse, which has declined by 9% since 2021. About 58% said their board has added directors from a broad set of diverse backgrounds, though the appointments weren’t exclusively focused on race or ethnicity.
During the past five years, corporate boards have become generally more racially and ethnically diverse, the report said. However, the percentage of Black and Latino directors has stagnated among S&P 500 companies, at 12% and 5%, respectively.
In addition, among companies in the Russell 3000, these numbers have declined, with the percentage of Black directors decreasing from 11% in 2018 to 8% in 2023 and the percentage of Latino or Hispanic directors decreasing from 8% to 4% during that time.
In the Ariel survey, 59% of board directors said DEI was added as a primary agenda item several years ago, while 28% added it as a priority in the last two years. Only 2% said it wasn’t a priority.
At the same time, 54% of directors said race and ethnicity receive too little attention among diversity issues and fall lower on the priority list than other identities, including gender, sexual orientation and political affiliation. More than a third also said they don’t believe their board prepares organizational leaders for effective oversight of DEI through onboarding or training.
Despite recent challenges to DEI initiatives, 72% of C-suite and HR leaders said they plan to increase their DEI commitments in the next two years, according to a Bridge Partners survey. Nearly all of the leaders said they believe DEI remains important for its positive impact on recruiting, hiring and retaining workers.
However, the forward momentum of gender diversity on corporate boards appears to be stalling among companies on the Russell 3000, according to a report from 50/50 Women on Boards. At the current rate, gender parity and 20% women of color representation on boards won’t occur until 2045.
Bias in hiring, performance evaluations and access to opportunities can derail numerous corporate DEI goals, according to a report from The Conference Board and Equality Action Center. Bias can also lead to high attrition rates, decrease employee engagement and reduce productivity, the report found.