2023-08-10 14:31:44
The death of African American George Floyd in a brutal police operation in 2020 caused a sensation around the world. In an effort to demonstrate the diversity of skin color, people of African American descent had also found their way onto the boards of American stock corporations.
In the meantime, however, the wheel seems to be turning back again. According to a study by recruiter Spencer Stuart, the proportion of new black directors at S&P 500 companies has nearly halved this year, almost back to where it was before Floyd’s assassination.
As of this year, only 15 percent of newly appointed board members at S&P 500 companies are black. In 2022 it was still 26 percent. In 2018, the share was 11 percent. The proportion of other non-white directors remained about the same compared to 2022. Latino directors accounted for 9 percent of new hires, up from 8 percent in 2022, but still half their share of the total population. About 12% of the US population is of African American descent.
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The slowing growth in the share is part of a backlash to increased pushes on issues such as climate change, labor rights, diversity and corporate governance (ESG), they say. The US Supreme Court’s decision in June, which strengthened universities’ preferential admission of white applicants, could discourage such appointments in the future. Companies are under pressure from investors to react primarily to inflation and fears of a possible recession.
ESG is falling behind as a trend
ESG issues are now only the third most important topic in boardrooms, the study says. The focus is increasingly on candidates with financial expertise. These criteria worsen the chances of women and people of color, who are less likely to take on corresponding roles. Many of the successes to date have been due to boards’ willingness to move away from traditional criteria for new directors, which favored white men.
Despite the diversity of new members, nonwhite directors remain underrepresented on S&P 500 boards. Overall, black directors made up about 11 percent and Hispanic 5 percent. Approximately 56 percent of respondents said they have committed to diversity when recruiting directors. Overall, 67 percent of the new directors fell under the metric, using the Nasdaq definition, which includes women, people who identify as LGBTQ or ethnic minorities, Spencer Stuart said. That’s still down from 72 percent in 2022. About 20 percent of respondents said their boards still prioritized hiring women and underrepresented minorities.
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