(The opinions expressed here are those of the author, a columnist for Reuters. This column is part of the weekly Reuters Sustainable Finance newsletter, which you can sign up for here)
By Ross Kerber
Sept 25 (Reuters) - U.S. corporate diversity initiatives are losing steam by some measures like in the boardroom, where fewer new S&P 500 directors are underrepresented minorities according to global executive search and leadership advisory firm Spencer Stuart.
Among those troubled by the trend is Barry Lawson Williams, a San Francisco-based investment consultant and boardroom veteran.
So Williams did something he has done before, this time at a bigger scale. Starting in late 2023 he staged a series of interviews with Black directors. The result will be called the "100 Black Voices" video archive, which Williams plans to make available soon via his website.
A big takeaway, Williams told me, is that nearly all his subjects felt the case for diversity is best made on business grounds rather than on appeals to justice or equity.
"Sure it's a moral issue, but there's a business case for diversity. Diversity improves decision-making and performance," Williams said.
I told Williams what I've heard from people like Josh Ramer, CEO of DiversIQ, which tracks diversity data, that studies show mixed results on just how much workforce or boardroom diversity improves financial performance.
"It's hard to pinpoint it or put an exact number on the performance," Williams said. "But I've asked people with a lot of experience and they were firm in saying that diversity breaks up groupthink, helps you avoid risks, and leads to more innovation."
The U.S. Census Bureau estimates Black or African-American people made up 14% of the population, and that 20% was Hispanic or Latino. Blacks accounted for 11% of S&P 500 board seats and Hispanics only 5% as of last year. Also, women held just 33% of S&P 500 board seats.
That won't change quickly. Women accounted for 42% of new S&P 500 directors in 2024, down from 46% for 2023 and 2022. The share of self-identified new minority directors fell to 26% this year, from 47% in 2021 Spencer Stuart said.
The decreases could show boards reaching goals as less than one new seat becomes open each year per S&P 500 board, said Spencer Stuart practice leader Julie Daum, even if they remain committed to diversity.
Williams said his interviews offer lessons on all types of diversity beyond just Black directors, who technically have not-so-bad representation. He said boards could be well-served to exceed the census ratios, but that he doesn't object to the arguments of those who say boards should seek "viewpoint diversity."
"I'm strongly against one-issue directors. But if someone has a little more conservative point of view, I'm not blanketly against that," Williams said.
Williams said boards should review their recruitment strategies and consider changes like term limits. His audience, he said, include current and prospective Black directors and the broader business community.
Williams was channeling key points from several taped conservations he shared with me. Having boards better reflect a diversifying U.S. population "is not about social justice, it's about economic survival," said one of those interviewed, Herman Bulls, Vice Chairman, Americas for JLL and a member of boards including the U.S. Defense Policy Board.
The interviews were as much about management as diversity. Directors shouldn't neglect their day jobs, said Bulls. Deborah Wright, once leader of Carver Bancorp, talked about the value of humility and knowing when to follow up on an issue one-on-one rather than in front of others.
"I can't say how many times I've seen a director blow themselves up by talking too much," she said.
More diversity won't happen without pressure from outsiders, Wright said: "If the shareholders and the public institutions don't press, it won't happen."
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(Reporting by Ross Kerber; Editing by David Gregorio)
((ross.kerber@thomsonreuters.com; (617) 412 0093;))
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