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Across the Russell 3000, a broad index of U.S. companies, 29%
now have two or more ethnically diverse directors, 7 percentage
points more than in 2016, according to the new data from ISS ESG,
an arm of Institutional Shareholder Services, scheduled to be
presented at a conference on Monday. By contrast 66% of those
boards now have 2 or more women, 27 percentage points more than
in 2016, ISS found.
Brett Miller, head of data solutions for ISS ESG, said the
figures reflect how boards traditionally recruit directors who
have already been top officials elsewhere.
The few minorities who become corporate directors are then in
demand, with 30% of the 817 individual Black directors within
the index serving on more than one board, compared to a rate of
19% for the 17,810 white directors counted for the study.
"Unless companies expand that recruiting pool you're going to
see the same individuals continuously sought after," Miller
said.
Corporate America's lack of minority representation has drawn
new attention during a nationwide wave of anti-racism protests
and activism since the death of George Floyd, an unarmed Black
man, in police custody in Minneapolis in May.
Top asset managers have previously focused more of their
diversity efforts on gender, not race, although that has begun
to change. Minority business leaders have long urged boards to
seek candidates from nontraditional backgrounds.
ISS ESG's Miller said companies have helped limit the pool of
obvious director candidates by their slow overall promotion of
minorities. He found 84.2% of Russell 3000 companies have no
ethnically or racially diverse top executives among their top
five executives, down only 1.4 percentage points from 2016.
(Reporting by Ross Kerber in Boston; Editing by David Gregorio)
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