The share of new Black directors at S&P 500 companies fell by nearly in half in 2023, returning to levels closer to those seen before the murder of George Floyd by police brought fresh attention to the lack of diversity on corporate boards.
Black directors made up 15% of the newly appointed board members appointed by companies in the S&P 500 last year, a drop from 26% in 2022 and heading back towards the 11% mark of 2018, executive recruiter Spencer Stuart said Tuesday in a report. The representation of other non-White directors was about the same as a year ago and stronger than in 2018: Hispanic directors were 9% of new appointments, up from 8% in 2022, but still about half their representation in the overall population, the data showed. Black people are about 12% of the US population.
The slowing gains for Black directors come as US companies face a backlash against corporate policies focused on topics such as climate change, workers’ rights, diversity and corporate governance, which some conservative politicians and policymakers have labeled as “woke capitalism.” The June US Supreme Court decision forbidding affirmative action in college admissions could also chill future appointments. And companies are under pressure from investors to respond to inflation and concerns about a potential recession.
Boards’ prioritizing of ESG topics overall fell from first to third in the study, with more now focusing on board composition. CEOs and candidates with extensive financial expertise are in demand, the data showed, criteria that can dull gains for women and people of color who don’t hold as many of those roles. Many of the previous gains had come from the boards being willing to expand their requirements away from the traditional criteria for new directors that had favored White men.
Even with the diversity of new members, non-White directors remain underrepresented on S&P 500 boards. Overall, Black directors make up about 11% of directors and 5% are Hispanic, Spencer Stuart found. Some 56% of respondents to the survey said they have made a commitment to including diverse candidates when recruiting directors.
Overall, 67% of the new directors were considered diverse when including the Nasdaq definition of people who are female, identify as LGBTQ or are among racial or ethnic minority groups, Spencer Stuart said. That’s a dip from 72% in 2022. About 20% of respondents said their boards are still prioritizing recruitment of women and underrepresented minorities.
(Updates with more detail on ESG-focused corporate policies, data on diverse searches from third paragraph.)
