Report reveals diversity gaps on corporate boards
The study is the first global analysis of several important dimensions of diversity in the boardroom.
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Diligent Research, the world leader in modern governance providing SaaS solutions across governance, risk, compliance, audit and ESG, recently revealed the results of its inaugural report “Board Diversity Gaps: The Global Modern Leadership Report.”
Socialized at the Modern Governance Summit, one of the report's most significant findings is that diversity in the boardroom, taking into account aspects such as race, ethnicity, age, and LGBTQ+ representation, lags significantly behind gender diversity across the board on a world level.
Conducted by Diligent, in collaboration with 22 partner organizations around the world, the report provides a first-of-its-kind holistic view of the progression of diversity and inclusion on public and private boards around the world, using a combination of quantitative data of company presentations, surveys of corporate board members, opinions of professionals, and interviews with directors.
This is the first global multidimensional analysis of boardroom diversity, including gender, race/ethnicity, and nationality, as well as skill set and LGBTQ+ representation.
“Diversity has risen up the boardroom agenda as organizations face increasing pressure to better reflect the diversity of their customer bases and communities, but progress has been slow and there are still many gaps when it comes to reporting on race, ethnicity and LGBTQ+ representation on boards. This report provides new, critical insights into how boardrooms worldwide are progressing against diversity goals and where there is still much work to be done,” stated Lisa Edwards, President and COO of Diligent and board director at Colgate-Palmolive.
These are the most important findings of the study:
- The percentage of S&P 500 directors from underrepresented racial/ethnic groups is just 22% and has not increased since 2021. Meanwhile, the percentages for Fortune 100 and 500 boards are 17.5% and 20.6%, respectively as of 2020, and 24% for the Russell 3000 as of June 2022.
- Only 36% of director appointments through May 2022 were women, in line with the average for all of 2021. Currently, female directors hold only about 27% of public company board positions, down from 26% in 2021, and an increase of four percentage points from 2019.
- The average age of female directors is approximately four years younger than their male counterparts, at 60 and 63.5 years, respectively. Female directors also have shorter terms than their male counterparts: 4.7 years compared to 7.6.
- The topic of LGBTQ+ representation lags significantly behind other elements of diversity in boardrooms, with the U.S. being the only region analyzed to provide this data. Members of the LGBTQ+ community hold just 0.5% of Fortune 500 board seats.
- New types of experience are being added to the boardroom, with 35% of newly appointed board directors bringing backgrounds in areas such as technology, marketing, sales, HR, ESG and legal by 2022.
- In a review of 228 private growth-stage companies, Diligent found that 58% have all-male boards, compared to just 6% of publicly traded companies. Women hold approximately 11% of board positions in these private companies, compared to 27% in public companies.
In 2020, in an effort to understand and champion diversity in the boardroom, Diligent launched Modern Leadership, an initiative to provide boards and senior leaders with the research, insights, partnerships and technology they need to catalyze even more diversity in their organizations. This includes the Diligent Director Network, the largest and most diverse community of board-ready executives globally.
The report benefited from contributions from the following external partner organizations:
Alliance for Board Diversity (ABD), Ascend, Better Boards Initiative, BoardReady, The Center of Excellence for Sustainable Environment and Social Inclusion (COE-SESI), Corporate Board Member, California Partners Project, the Director Diversity Initiative at University of North Carolina, the ESADE Centre for Corporate Governance, European Women on Boards, Hawkamah, Human Resource Governance Leaders (HRGL), INCAE, the Institute of Directors in India, Institut Luxembourgeois des Administrateurs (ILA), the Latino Corporate Directors Association (LCDA), Out Leadership and the OutQUORUM Initiative for LGBTQ+ Board Diversity, Spencer Stuart, the University of Lagos, WTW and Women Business Collaborative.
“The global picture of boardroom diversity today is varied and full of gaps, but what’s overwhelmingly clear is that gender diversity is the primary focus for boards around the world. Board diversity regarding race, ethnicity, age and LGBTQ+ representation fall woefully behind. By better understanding the state of boardroom diversity across the globe, we’re able to increase the odds that corporate leadership opportunities will be made available to underrepresented groups,” highlighted Dottie Schindlinger, Executive Director of the Diligent Institute.