Racial and ethnic minorities now hold a fifth of board seats at Russell 3000 companies, up from 12% in 2019, but remain underrepresented, data from ISS Corporate Solutions on Tuesday showed.
The increase comes as U.S. companies face growing pressure from investors to add more Black, Latino and Asian voices to their boards as part of a broader national reckoning on race relations.
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Still, most minority groups hold a smaller share of board seats than their share of the total U.S. population. That is especially true for directors of Hispanic or Latino origin, who hold 3.6% of board seats but account for 18.9% of the U.S. population, according to U.S. census figures.
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“While this is a huge sea change in terms of the percentages, it still falls short of the ethnic breakdown of the U.S. population,” said Marija Kramer, head of ISS Corporate Solutions, an arm of proxy adviser Institutional Shareholder Services, which will release the study later on Tuesday. “It’s a watershed moment but probably not something to pat ourselves on the back too much about,” she said.
Top asset managers and pension funds have pushed for better diversity in the leadership of portfolio companies since well before the death of a Black man, George Floyd, at the hands of Minneapolis police in 2020 set off national demonstrations on equality and social justice.
Often the investors have found receptive audiences, but slow turnover on corporate boards has limited the pace of change, recruiters say.
Many U.S. companies now publish a breakdown of the backgrounds of their directors, sometimes on a person-by-person basis, helping ISS to estimate boardroom diversity in the Russell 3000, whose boards are often less diverse than bigger peers in the S&P 500.
The biggest gain over the four-year period was for Black or African-American directors, who nearly doubled their share of board seats to 8.3% from 4.4% in 2019. They were most represented in the utility sector, with 12% of board seats, and least represented among information technology, energy and healthcare companies, each at 6%.
Just 1% of the companies in the index had Black or African-American CEOs, highlighting how companies have not brought as much diversity to the CEO role as in the boardroom. Still, CEO diversity has risen as well, with a 56% increase in the number of Black or African-American CEOs since 2019.
Gale V. King, a director at Autozone Inc, J.B. Hunt Transportation and Unum Group and board chair of The Executive Leadership Council, which promotes the development of Black executives, said the data shows some progress but that more work is needed for boards to reach representation parity.
Having a more diverse board, she said, “drives better decision making in innovation, guidance for management, and risk management. It also helps reduce group think.”
Marta Newhart, a Mexican-American and former brand chief of Westinghouse Electric who is active in the Latino Corporate Directors Association, said the figures show companies should work harder to attract more diverse directors who can help them serve broad customer bases.
Compared to Hispanics’ total share of the U.S. population, their 3.6% share of board seats “isn’t anywhere near where it’s supposed to be,” she said.
(Reporting by Ross Kerber; Editing by Simon Jessop and Susan Fenton)