America’s largest companies added women and minorities to their boards of directors at a faster pace over the past two years, a period when sexual harassment scandals thrust workplace equality into the spotlight, a study shows.
The rate of change remains slow, but minorities are making visible gains for the first time in many years, according to the 2018 Board Diversity Census, released Wednesday by the Alliance for Board Diversity and the consulting firm Deloitte.
The number of African-Americans on the boards of Fortune 500 companies rose for the first time since the census began tracking the number in 2010. It was a modest gain, with blacks holding nearly 9 percent of seats in 2018, compared to nearly 8 percent in 2010.
The number of black women on the boards of Fortune 500 companies jumped by 26 percent between 2016 and 2018. By comparison, in the four-year period between 2012 and 2016, the number of black women on corporate boards rose just 18 percent.
The number of Asian women rose even faster at 39 percent in the past two years. But minority women still hold just 5 percent of Fortune 500 board seats.
Overall, corporate boards remain overwhelmingly white and male. Women held 22 percent of Fortune 500 seats in 2018, compared to 20 percent two years ago and 16 percent in 2010. White men held 66 percent of Fortune 500 board seats in 2018.
Companies have come under pressure both from politicians and institutional investors in recent years to diversify their ranks. The push intensified as a cascade of sexual misconduct scandals galvanized the #MeToo movement and forced the ouster of powerful executives in the entertainment, retail, media and other industries.
Last year, asset manager BlackRock Inc. sent a letter to companies in the Russell 1000 index with fewer than two female board members asking them for an explanation. The firm State Street has said that, starting in 2020, it will vote against all members of nominating committees on U.S., U.K. and Australian companies with no women on boards.
And last year, California’s legislature passed a law – the first of its kind in the United States – requiring publicly traded companies headquartered in the state to have two or three women directors by 2021, depending on the size of their boards.
“People are getting impatient,” said Linda Akutagawa, chair of the Alliance for Board Diversity. “The change is a reflection of some of the overall societal changes.”
The fastest changes came on the boards of Fortune 100 companies, which the census has been tracking since 2004. Nearly 39 percent of board seats at Fortune 100 companies were held by women and minorities in 2018, compared to 29 percent in 2004.
Women held 25 percent of Fortune 100 board seats in 2018, compared to 23 percent two years ago and just 17 percent in 2004. But minorities saw the most significant gains in the past two years, reaching 19 percent of Fortune 100 board seats in 2018, compared to 17 percent in 2016. In the four preceding years, the number of minority directors had risen just 1 percent.
The study noted that minority men have made almost as much progress on Fortune 100 boards in the past two years as they did in the 12 years before, although the gain was a modest 1 percent.
The report encouraged companies to expand their board recruitment practices to consider candidates with a diverse set of skills. Many companies have traditionally sought board members with chief executive experience, a practice that puts women and minorities at a disadvantage, since the majority of CEOs at publicly traded companies are white men.
Smaller companies facing stiff competition for talent would especially benefit from widening their search criteria to include candidates with skillsets such as digital expertise, said Deb DeHaas, a managing partner at Deloitte.
“We believe passionately that there is a broad and diverse pool of potential candidates,” DeHaas said. “They may not sit in the CEO role or in the retired CEO role.”
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