Diverse representation on boards slows

Less directors view their boards as diverse in 2023.

Corporate boards in the S&P 500 have become more broadly racially/ethnically diverse over the past five years (from 20% in 2018 to 25% in 2023). However, the Conference Board / ESGAUGE data^[1] shows that the percentage of Black and Latino directors that opt to self-report their race/ethnicity has stagnated (at 12% and 5%, respectively). For a broader set of companies in the Russell 3000, those self-identification numbers have actually declined—self-reporting by Black directors decreased from 11% in 2018 to 8% in 2023, and from 8% to 4% for Latino or Hispanic directors over the same period.

Consistently, the number of Black Corporate Directors Study respondents who view their boards as racially diverse (81%) declined by 9% since the inaugural 2021 study—suggesting that progress is slowing.

While more than half (58%) of directors surveyed reported their boards have added directors from a broad set of diverse backgrounds—these appointments are not exclusively focused on race/ethnicity.

DEI remains a primary agenda item in boardrooms, but with inadequate oversight and infrastructure  

• DEI was added as a primary agenda item several years ago for the majority (59%) of the boards where respondents serve, while 28% added it as a priority within the last two years. Very few directors (2%) reported that it is not primary, an encouraging decline from 2021 (7%).
• However, over half (54%) of directors feel that among the wide range of diversity issues, race/ethnicity receives too little attention and is lower on the priority list in their boardrooms after other identities. Race follows gender identification, sexual orientation, and political affiliation in the pecking order. Still, these results show modest improvement from the 62% who felt it received too little attention in 2021.
• Conversely, nearly half (45%) of average workers feel there is an excessive emphasis on race and ethnicity—particularly white male workers (54%). In fact, this sentiment has increased since 2021.

Many board members surveyed still feel their companies struggle to operationalize DEI goals effectively—with stagnation or modest improvement from two years ago.

• More than a third (37%) do not believe that their board prepares organizational leaders for effective oversight of DEI through a structured onboarding and training process.
• Less than half (46%) feel that diverse board members oversee DEI through service on Nominating and Governance committees or other relevant committees—where the topic is often addressed in depth.
• Diverse directors are five percent less likely (55%) to say that their board is regularly overseeing the risks and opportunities related to potential impacts of their companies on communities of color.
• While three quarters (75%) of directors report that their companies are investing capital to support their racial equity and diversity goals, this statistic declined 7% from 2021. Of note, only 63% of this group report that the capital committed is sufficient to effectively fund DEI initiatives—down by 8% from 2021.

Leaders and workers do not agree on why companies prioritize DEI  

Despite directors reporting that DEI is a primary agenda item for their boards and management teams, average workers do not believe it. In fact, only 42% of workers feel that DEI is very important to their company’s leadership, compared to 63% of directors.

When asked why DEI is a priority for their companies, the majority of directors surveyed noted a genuine care for the welfare of diverse employees (66%) as the leading reason. They also listed business imperatives like shareholder concerns (44%) and societal concerns like addressing social inequality (42%) as top drivers. Workers are far more skeptical, with less than half (46%) believing that their companies are prioritizing diverse employees. They also appear to view leaders as more focused on reputation, with public relations (43%) and political perception (27%) as leading responses.

Main reasons directors and workers report their company/employer’s leadership spends time on DEI issues

Current affairs dampen directors’ willingness to champion DEI efforts in the boardroom

When it comes to taking a public stance on social justice or civil rights issues, today’s leaders are more cautious. Results show that 77% of diverse directors feel a responsibility to speak out—a 16% drop from 2021.

The Supreme Court’s Affirmative Action decision in higher education has caused most directors surveyed (63%) to be pessimistic about DEI’s progress in corporate America. Of that group, 29% believe that the ruling gives companies cover to be less committed to DEI.

However, when asked for commentary on how the ruling may impact corporate DEI activities, respondents’ sentiments were mixed, with phrases like: “Some [companies] will maintain their commitments and do more. Other corporations will use this as an opportunity to backtrack.”

Directors were asked about their optimism levels about DEI’s progress in corporate America and the expected impact of the Supreme Court’s decision regarding Affirmative Action in higher education.

Calls-to-action for Corporate America

The Black Corporate Directors Conference created an accountability framework for boards and leaders to meaningfully and credibly advance DEI in their institutions, entitled: “The Three Ps:” People, Purchasing, and Philanthropy. In response to this survey data, Ariel has provided updated guidelines, which can be found at the conclusion of the report.

Click here to read the full results of this year’s Black Corporate Directors Study.

Click here to read the results of the inaugural Black Corporate Directors Study.

Survey hosting and data collection occurred from August to October 2023 of 165 board members who attended the Black Corporate Directors Conference. Analysis and reporting were conducted by Helical Research, Inc. Helical also polled a national sample of 2,909 average U.S. workers employed full- or part-time across races for direct comparison.