A new board diversity report by BoardProspects reveals companies in the Russell 3000 are at a major inflection point regarding racial equality on their boards, but most still have no Black board members.
According to the report, released Monday, of the nearly 27,000 board members within the Russell 3000, 5.4 percent are Black. Further, 60 percent of those listed companies have no Black board members at all.
A deeper look reveals, however, companies are aiming to make their boards more diverse. “The encouraging news is that there was a significant increase in the appointment of Black board members during the latter half of 2020,” BoardProspects said.
Between 2019 and 2020, Russell 3000 companies appointed 4,145 new board members, 422 (10 percent) of which were Black. Black men gained 58 seats in 2019 and 170 seats in 2020, and Black women gained 56 and 138, respectively. “Clearly, corporate boards still have a long way to go in terms of achieving racial diversity, but we’ve seen some remarkable improvements just over the past year,” said BoardProspects President and CEO Mark Rogers in a press release.
The findings reveal the Black Lives Matter movement and widespread outrage sparked by the death of George Floyd in police custody have served as a catalyst for change. According to the report, Black board members account for 18.5 percent of all new board appointments since the death of Floyd in May 2020. Of the 422 new Black board members appointed, 62 percent occurred in the seven months following Floyd’s death.
“There is a solid business case for inclusionary policies at the board level,” Rogers stated. “Several studies have shown that companies with a higher level of board diversity outperform those with less diversity and consistently bring new perspectives to corporate strategies.”
Diversity by industry
Banking showed the most appointments of Black board members between 2019 and 2020, with 22 new appointees to Russell 3000 companies, according to the report. Biotechnology and internet/online companies followed with 17 appointees each. Industries that added the least Black board members during that time are specialty retail, software, healthcare provision, and food products, with 11 appointees each.
The top three industries with the highest number of Black board members, according to the report, are motor vehicle parts, defense equipment/products, and personal care products and services. The bottom three are water transport/shipping, semiconductors, and sporting goods companies. Industries must have included 10 or more companies in the Russell 3000. Biotechnology and oil extraction also fared poorly.