The Fading Priority of Diversity on Corporate Boards
In the wake of George Floyd’s tragic death in 2020, investor Mellody Hobson received a flood of calls from Fortune 500 companies seeking diverse candidates for their boards. Fast forward to today, and those requests have dwindled significantly.
A Shift in Corporate Priorities
Hobson, co-CEO of Ariel Investments and a board member at JPMorgan and Starbucks, attributes the decline to a growing backlash against diversity, equity, and inclusion (DEI) policies. This shift is evident in the numbers: among Russell 3000 companies, the percentage of new Black directors has plummeted to 12% in 2024, down from 26% just two years ago.
The Rise of Conservative Pushback
Conservative activists have been vocal in their opposition to DEI policies, using litigation and other means to push back against these initiatives. As a result, corporate directors and advisers say that DEI has taken a backseat in company priorities. “It’s not a non-issue, it’s just not THE issue,” Hobson notes.
A Decrease in Diverse Hires
The data bears out this trend: the number of new white directors has bounced back to 69%, up from historic lows of 52% in 2022. Meanwhile, recruiters report that companies are no longer making diverse candidate slates a top requirement in director searches. “A couple of years ago, more searches had diversity as number one or two criterion than have it there now,” says Richard Fields, head of the board effectiveness practice at Russell Reynolds.
The Importance of Diversity in Business
Despite the setback, proponents of DEI policies argue that building a diverse board is crucial for better business outcomes. “It has been repeatedly shown that building a diverse board will ultimately ladder up to better business,” says Lisa Davis, a managing director at advisory firm Teneo.
A Cultural Shift
The decrease in diverse new hires to corporate boards has a significant correlation with the cultural shift, says Andrew Jones, head of ESG at the Conference Board. “In 2020, there was initial momentum when the death of George Floyd was followed by social unrest and corporate DEI was at its height. Then there was a lot of legal and political scrutiny following the Supreme Court decision last year.”
The Road Ahead
While the current landscape may seem discouraging, Hobson remains optimistic about the long-term prospects for diversity on corporate boards. “We will continue to move in the right direction,” she says. As the business community looks to the future, it’s clear that prioritizing diversity and inclusion will be crucial for driving success and addressing longstanding inequities.
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