Corporate boards have become significantly more diverse over the past five years, according to a new reportĀ from The Conference Board and ESGAUGE. The share of female directors in the S&P 500 increased from 23% in 2018 to 32% in 2023, while the reported share of racially/ethnically diverse directors grew from 20% in 2018 to 25% in 2023.
As the report points out, however, the reported growth in both racial and gender diversity has slowed in the past year. The share of reported female directors increased by one percentage point, from 31% in 2022 to 32% in 2023. And the share of reported racially/ethnically diverse directors remained virtually unchanged, rising from 24% in 2022 to 25% in 2023.
The report identifies a key factor in the slowdown: The 2023 class of new corporate directors is less diverse in terms of race and gender than the 2022 class. The 2023 class of new directors was 38% female, compared to 43% in 2022. The percentage of racially/ethnically diverse directors among new board members saw an even steeper decline, dropping from 45% in 2022 to 36% in 2023.
The report also notes that the actual levels of racial/ethnic diversity may be higher than the reported levels, given the reluctance of some directors to self-identify as being part of a demographic group. “Companies that may be underreporting diversity should have discussions at the board level about the benefits of providing more complete disclosure, given that an absence of diversity can open the door to shareholder activism and broader criticism of the company,” said Paul Washington, Executive Director of The Conference Board ESG Center.
The report addresses the current state of diversity in boardrooms and provides insights on how to maximize the benefits of a diverse board. It was produced in collaboration with data analytics firm ESGAUGE, along with Debevoise & Plimpton; KPMG; Russell Reynolds Associates; and the John L. Weinberg Center for Corporate Governance.
Additional findings and…
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