Companies make bold promises about diversity, but there’s a long way to go

As protests sweep the nation, more and more companies are announcing initiatives aimed at promoting diversity and inclusion within their walls.

Whether these promises lead to tangible outcomes remains to be seen, especially since corporations are not required to disclose statistics on the composition of their workforce, which makes tracking broad progress difficult at best.

The data that has been collected through surveys paints a picture of just how far things need to change before companies are truly representative of the makeup of society at large, and before salaries are comparable across categories like gender, race, ethnicity and sexual orientation.

Much attention has been given in recent years to the lack of diversity on corporate boards, which has forced companies to act on that front. All S&P 500 companies now have at least one woman on the board, and executive search firm Spencer Stuart found that last year, of the 432 new independent directors added to S&P 500 boards, 59% were women and minority men.

But statistics also show the lack of progress among the corporate workforce. According to data from human resources consulting company Mercer, 64% of workers in entry level positions are white. In the top executive ranks, however, 85% of positions are held by whites, demonstrating the promotion gap that minorities face. And women and minorities continue to under-earn white male colleagues, according to the Economic Policy Institute.

Social values aside, there’s a real financial risk for companies that fail to put their money where their mouth is. A lack of diversity in background and experience can stifle innovation and promote group think, while companies that don’t prioritize inclusion may struggle to attract and retain top talent and younger workers. Additionally, ESG investing — when a company’s environmental, social, and governance factors are considered alongside financial metrics — is growing in popularity. Experts say that following the coronavirus pandemic, the “S” element is set to become even more important, meaning that companies that don’t prioritize diversity could see investors ditch their stock.

“Companies’ consideration of diversity & inclusion is not only important on the basis of values; it also has a material impact on their long-term performance,” Barclays analysts said in a research report.

The pressure on corporations has built with widespread protests following the death of George Floyd at the hands of a white police officer in Minneapolis.

Andrew Behar, CEO of the shareholder advocacy group As You Sow, said we could be at a watershed moment that will ultimately force companies to begin disclosing more information. His group is among those pressuring companies to provide more transparency around issues including workforce composition, recruitment, retention, pay and promotion practices. He said that regulation could be next, including around CEO compensation, pointing to successful past campaigns by investors.

“We…