While corporate America has made strides in broadening diversity in Fortune 500 boardrooms, the percentage of Black and Latino directors remains troublingly stagnant, a new study has confirmed.
Despite a significant increase in overall board diversity over the past five years in the US – rising from 20% in 2018 to 25% in 2023 – racial representation among Black and Latino directors has stalled. In fact, in broader indexes like the Russell 3000, representation of both groups has actually declined, according to the latest Black Corporate Directors Study by Ariel Investments.
The study found that momentum around diversity, equity and inclusion in corporate boardrooms is shifting – especially in areas such as the appointment of directors of colour, attention to race in board discussions, and corporate capital dedicated to diversity initiatives.
STAGNATING RACIAL REPRESENTATION ON CORPORATE BOARDS
The numbers tell a sobering story. Black directors currently make up 12% of S&P 500 boards, while Latino representation sits at just 5%. In the broader Russell 3000, these figures have dropped even further – Black directors decreased from 11% in 2018 to 8% in 2023, and Latino representation fell from 8% to 4% during the same period.
This data signals a clear slowdown in progress for minority groups, even as companies continue to increase overall board diversity. The Ariel study found that 81% of Black Corporate Directors now view their boards as racially diverse, but this is a 9% drop from 2021, highlighting the growing concern that true representation is beginning to stall.
DEI CONCERNS
While DEI remains on the agenda for most corporate boards, data from the study shows a decline in several critical areas:
- Fewer directors of colour have been appointed to boards recently, signalling stagnation.
- Race and ethnicity are receiving less attention in operational and risk discussions.
- Corporate investment in DEI initiatives has decreased.
- Fewer directors are willing to publicly champion DEI initiatives, particularly in light of recent societal and legal shifts.
Although corporate boards continue to champion DEI initiatives, the focus on race and ethnicity has taken a backseat to other aspects of diversity, such as gender identification and sexual orientation. According to the study, over half (54%) of directors feel that race and ethnicity receive too little attention, with many viewing these identities as less prioritised in boardroom discussions compared to two years ago.
DEI PRIORITIES
Furthermore, the percentage of boards that have made DEI a primary agenda item has grown – 59% reported that it has been a top priority for several years, with 28% adding it within the last two years. However, only 37% of directors believe their board provides structured DEI training for organisational leaders, and fewer than half (46%) feel that diverse board members are positioned to oversee DEI through key committees.
This lack of structured oversight is reflected in a 7% decline in the number of boards investing capital in DEI initiatives since 2021. Moreover, only 63% of directors feel the amount of capital being allocated is sufficient to drive meaningful change, an 8% drop from two years ago.
DEI DISCONNECT & DRIVERS
One of the most striking findings from the study is the growing disconnect between corporate leadership and the average workforce when it comes to DEI priorities. While 63% of directors believe DEI is highly important to their company’s leadership, only 42% of employees agree. In particular, white male workers are increasingly expressing discomfort with the focus on race and ethnicity, with 54% saying there is too much emphasis on these issues.
The reasons for this disconnect vary. Directors overwhelmingly cite genuine concern for diverse employees (66%) as a primary driver of DEI initiatives, followed by business imperatives (44%) and societal concerns (42%). However, many employees view these efforts as more performative, with 43% believing DEI is driven by public relations and 27% citing political pressure as a motivator.
This growing scepticism among workers suggests that while DEI may be a key talking point in boardrooms, the impact isn’t being felt throughout organisations, especially by those on the front lines.
SUPREME COURT RULING’S IMPACT ON DEI
The recent Supreme Court ruling on Affirmative Action in higher education has further complicated the future of corporate DEI initiatives. According to the survey, 63% of board directors are now pessimistic about DEI’s future, believing that the ruling may give companies an excuse to scale back on their commitments.
While most directors (77%) still feel a responsibility to speak out on social justice and civil rights issues, this represents a 16% drop since 2021. The hesitation to boldly champion DEI in public could signal that the winds are shifting in corporate boardrooms, with many executives choosing a more cautious approach amid the current political and social climate.
ACCOUNTABILITY FOR MEANINGFUL CHANGE
To combat the growing stagnation in DEI progress, the Black Corporate Directors Conference has developed a framework for accountability, calling on boards to focus on “The Three Ps”: People, Purchasing, and Philanthropy. These areas represent key levers through which companies can advance diversity and inclusion meaningfully.
Ariel Investments also recommends that corporate boards commit to stronger oversight, including more structured DEI training, greater investment in DEI initiatives, and a renewed focus on ensuring racial and ethnic diversity in key leadership roles.
Click here to read the full study.
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