Boardroom Diversity: Slow but Steady Gains for Women and People of Colour

Despite slow overall growth, racial and gender diversity on corporate boards is making modest gains, a new report has revealed.

According to the latest Gender Diversity Index report from 50/50 Women on Board (50/50WOB), women now hold 30% of board seats across Russell 3000 companies as of 30 June 2024. While this marks an important milestone for gender equity, the rate of progress has decelerated, and the representation of people of colour remains lower than desired.

The report, produced in collaboration with Equilar and Bentley, reveals that progress in board diversity is slower than in previous years. The percentage of women on boards increased by only one percentage point over the past year, down from an average growth of two and a half percentage points between 2020 and 2022. But while the pace has slowed, there is a positive shift in racial diversity:

• 19% of Russell 3000 board members identify as people of colour, an increase from 18% in 2023.
• Within that 19%, 8% are women of colour, showing a small but meaningful rise in intersectional representation.

However, there is still work to be done. As Heather Spilsbury, CEO of 50/50 Women on Boards, emphasises: “The progress toward gender and racial diversity is steady but slow. We’re seeing incremental gains, but it’s not happening fast enough to reflect the diverse makeup of our society.”

STATE OF RACIAL & GENDER DIVERSITY ON BOARDS

The 50/50 Women on Boards Gender Diversity Index also provides key insights into how companies are addressing racial and gender diversity. It revealed that while women now make up 30% of board seats, only a fraction of these women identify as people of colour, pointing to the intersectional challenges in advancing both racial and gender diversity.

Additionally, only 13.3% of Russell 3000 companies have achieved full gender balance, with 44.4% having at least three women on their boards. Companies with a mix of racial and gender diversity tend to outperform those with more homogeneous boards in both innovation and decision-making, noted the study.

LEADING STATES & INDUSTRIES IN BOARD DIVERSITY

Several states and industries are ahead of the curve when it comes to racial and gender diversity. Nine states, including California, Massachusetts, and Illinois, have over 30% women on boards, up from just four states in 2023. These states also tend to perform better on racial diversity, showing a link between progressive legislation and boardroom inclusion.

In terms of sectors, all industries now have more than 25% women on their boards, but only five sectors, including utilities and consumer goods, exceed 30%. The utility sector leads with 36%, but sectors like energy and financial services lag behind in both racial and gender diversity.

RACIAL & GENDER DIVERSITY MATTERS

Research consistently shows that companies with diverse leadership – both in terms of race and gender – perform better, make more innovative decisions, and have stronger governance structures. Companies with women and people of colour in leadership roles, such as CEO, Board Chair, or Nominating Chair, are more likely to achieve gender-balanced and racially inclusive boards.

 “When women, especially women of colour, are represented at the highest levels, boards make better strategic decisions that are more reflective of their customer base and the broader society,” noted Spilsbury.

FASTER PROGRESS NEEDED

Although the increase in both gender and racial diversity on boards is encouraging, the slowdown in overall growth is concerning. In the largest 100 Russell 3000 companies, women now hold 35.4% of board seats, but smaller companies are moving much slower, with women holding just 26.7% of board positions. The representation of people of colour remains similarly uneven across company sizes and sectors.

A key finding is that companies with more than three women on their boards are more likely to see improved racial diversity. This intersectionality – where gender and race work together to improve diversity overall – is critical in driving systemic change.

MOVING TOWARDS GREATER INCLUSION

The slowing pace of progress underscores the need for more aggressive action. The 50/50 Women on Boards Global Summit last week (on 10 September) convened corporate leaders in New York to address these challenges and push for faster, more inclusive growth.

“We can achieve 50% women and 20% women of colour on boards within the next decade, but only if we commit to more substantial changes,” asserted Spilsbury.

Click here to read the full report.

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