Racial justice protests last summer brought attention to the lack of diversity in just about every power center in America. But while calls for policing reforms and a reduction in income inequality have commanded headlines, some Hispanic leaders have used the moment to cast a spotlight on a less noticed uphill diversity initiative: boosting the representation of Latinos in boardrooms of a nation where they’re already the largest ethnic group.
Hispanic activists think the time is ripe for making advances. In September, California approved a law that will require public companies based in the state to have more women on their boards and at least one director from an underrepresented minority by the end of 2021. Nasdaq in December submitted a proposed rule to the Securities and Exchange Commission that would require its more than 3,000 listed companies to have at least one female director, and one from an underrepresented minority or LGBTQ group.
Giant fund managers Vanguard Group and BlackRock Inc. this year will begin tracking gender, ethnic, and racial diversity on public companies in which they invest. Vanguard will focus on boards, saying it may vote against directors at companies where progress on diversity falls short starting in 2021; BlackRock will take the same approach starting in 2022, but will start this year to push companies to release their overall ethnic and racial data.
These changes are meant to update the demographics of boards that remain mostly White—the race of 8 in 10 directors at S&P 500 companies in 2019—and 72% male. While companies aren’t required to publicly disclose the racial or ethnic composition of their boards or employee ranks (though some have begun releasing data voluntarily), surveys suggest there’s a dearth of diversity in Corporate America. Consultant KPMG says only 2.7% of board members at Fortune 1000 companies were Hispanic in 2019. And among boards of S&P 500 companies, 37% lack at least one Black director, according to a study that executive recruiter Russell Reynolds Associates released in October.
That study found that ethnic minorities on boards across all companies on the Russell 3000 index surpassed 10% for the first time in 2019. Yet Esther Aguilera, chief executive officer of the Latino Corporate Directors Association (LCDA), knows that many companies view diversity as simply a numbers game, with some failing to make sure that a range of different minorities is considered when a director slot gets filled. With only a limited number of public company board seats available every year, the competition is getting harder—especially as other women’s groups and racial organizations simultaneously push for greater representation. The Board Challenge, an initiative that started last fall, has gotten more than 60 companies to sign its pledge to hire one Black director within the following 12 months. Nine Black directors have already gained seats through the program. LCDA is working to make sure Latinos don’t get left out.
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