Deloitte’s Center for Board Effectiveness and the Alliance for Board Diversity Unveil New Industry Data from the Missing Pieces ReportJanuary 16, 2020
New data highlights board diversity for industry centric companies in the categories of consumer; energy, resources, and industrials; financial services; life sciences and health care; and technology, media and telecommunications.
NEW YORK and WASHINGTON, Jan. 16, 2020 — Looking at boardroom diversity, through an industry lens, technology, media, and communications (42% of companies within that industry) and life sciences and health care (38% of companies within that industry) companies have the greatest percentage of boardroom diversity according to new data from the “Missing Pieces Report,” a multiyear study published by the Alliance for Board Diversity (ABD), in collaboration with Deloitte.
Since launching “Missing Pieces Report: The 2018 Board Diversity Census of Women and Minorities on Fortune 500 Boards,” last year, the Alliance for Board Diversity and Deloitte have examined the data from another angle — taking a look at the Fortune 500 in alignment with their respective industries, which are classified as: consumer; energy, resources and industrials; financial services; life sciences and health care; and technology, media and telecommunications. Industries leading in having boards with greater than 40% diversity include: technology, media and telecommunications (42% of companies within that industry); and life sciences and health care (38% of companies within that industry).
”Steady progress has been made over the years with diversity being linked to greater innovation, better financial outcomes and increased transparency by Fortune 500 companies. The industry data allows for a deeper understanding of untapped opportunities to increase diversity in the boardroom,” said Deb DeHaas, vice chairman and national managing partner, Deloitte Center for Board Effectiveness. “While increases in boardroom diversity over the last two years are encouraging, there is still much more work to be done.”
Viewing the numbers by industry allows for a deeper conversation about where headway has been made and where there are more opportunities for diversity in the boardroom. Key findings for the Fortune 500 include:
- Technology, media and telecommunications (42% of companies within that industry) lead all industries in having boards with greater than 40% diversity. They are followed by life sciences and health care (38% of companies within that industry). Energy, resources and industrials companies have an opportunity to increase board diversity from the current rate of 20%.
- The percentage of board seats held by minority men is strongest in the life sciences and health care industry (15%).
- The percentage of board seats held by minority women is strongest (6%) in the consumer industry, followed closely by technology, media and telecommunications (5.8%). Conversely, minority women held 3.8% of board seats with financial services; 3.6% with energy, resources, and industrials; and 2.5% in the life sciences and health care industry.
- Minorities in the technology, media and telecommunications industry hold more board seats than Caucasian/white women (18.8% versus 17.2%).
- Across all industries, African American/Black directors hold the largest percentage of board seats among all minorities, and they have a particularly strong representation in life sciences and health care (10.1%), followed closely by financial services (9.6%).
- With Caucasian/White people holding more than 80% of the total number of board seats in the Fortune 500 in each industry, there’s an opportunity to increase diversity in the boardroom.
Though the pace of change is still slow in relation to shifting demographics in the U.S., when the “Missing Pieces Report: The 2018 Board Diversity Census of Women and Minorities on Fortune500 Boards,” was released, the number of Fortune 500 companies with greater than 40% of board members who are women and/or minorities has nearly tripled since 2010. Looking at boardroom diversity through the industry lens may spark additional conversation on where specific progress is happening and where there is opportunity for more work to be done.
“As companies face industry disruption, cyber risk, regulatory uncertainty, and more, they will need to leverage the board as a strategic asset in navigating a complex business environment. There is a valuable opportunity for forward-looking boards to embrace the wide range of skills, experiences, and perspectives diversity brings,” said Linda Akutagawa, chair for the Alliance for Board Diversity and president and CEO, LEAP (Leadership Education for Asian Pacifics). “Taking a broader look at diversity and what those candidates bring to the boardroom could provide organizations with a competitive edge.”
As reported when the Missing Pieces data was released on Jan. 16, 2019, Fortune 500 board representation of women and minorities saw an all-time high at 34% (1,929 board seats), compared to 30.8% in 2016 (1,677 board seats) — Total minority representation also increased to 16.1% (912 board seats) from 12.8% in 2010, the first year Fortune 500 data was captured. Other key findings for the Fortune 500 include:
- African American/Black women gained 32 seats in 2018, an increase of 26.2% from 2016. African American/Black men gained 26 seats in 2018, an increase of 8.5% from 2016.
- Hispanic/Latino men gained 21 seats in 2018, an increase of 14.3% from 2016. Hispanic/Latina women gained four seats in 2018, an increase of 9.8% from 2016.
- Asian/Pacific Islander men gained 25 seats in 2018, an increase of 20.3% from 2016. Asian/Pacific Islander women gained 17 seats, an increase of 38.6% from 2016.
To download the full report, “Missing Pieces Report: Industry View,” which includes additional data on board diversity in the Fortune 500, please visit http://www.deloitte.com/us/2018missingpiecesindustry and http://theabd.org/.
The Alliance for Board Diversity (ABD) and Deloitte utilized a census methodology for the 2018 Board Diversity Census. The Board Diversity Census counts Fortune 500 board directors to provide a measurement of the representation and progress of women and minorities in business leadership and to allow for comparable statistics based not on a discrete list of identical companies but on the Fortune-listed companies in the given years for which the census was conducted.
The Board Diversity Census analyses are based on companies on the Fortune 500 list published in 2018. ABD examined Fortune 500 companies because they are recognized and serve as the most influential businesses in the United States, ranked by revenue each year.
For the purposes of this study, extensive research was conducted to confirm the gender, race and ethnicity of board directors. To ascertain each company’s total number of directors and board composition, Deloitte reviewed Securities and Exchange Commission (SEC) annual filings submitted as of June 30, 2018, including the proxy statements and Form 10-K or Form 10-K/A. For insurance companies that do not submit annual filings to the SEC, Deloitte obtained information from the National Association of Insurance Companies (NAIC) regulatory database of annual statements submitted as of June 30, 2018. Fifteen certain data fields (e.g., board chair, lead director, committee chair) are not typically identifiable in filings from insurance companies. In addition, the annual shareholder meeting had to have occurred by June 30, 2018. If these two conditions were not met, Deloitte referred to the most recent filing that satisfied those parameters. For additional information on the research methodology, please reference the report’s appendix.
About the Alliance for Board Diversity
Founded in 2004, the Alliance for Board Diversity (ABD) is a collaboration of four leadership organizations: Catalyst, The Executive Leadership Council (ELC), the Hispanic Association on Corporate Responsibility (HACR) and LEAP (Leadership Education for Asian Pacifics). Diversified Search, an executive search firm, is a founding partner of the alliance and serves as an adviser and facilitator. The ABD’s mission is to enhance shareholder value in Fortune 500 companies by promoting inclusion of women and minorities on corporate boards. More information about ABD is available at www.theabd.org.
Catalyst is a global nonprofit working with some of the world’s most powerful CEOs and leading companies to help build workplaces that work for women. Founded in 1962, Catalyst drives change with pioneering research, practical tools, and proven solutions to accelerate and advance women into leadership — because progress for women is progress for everyone.
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 5,000 private and middle market companies. Our people work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthy society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Now celebrating 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 312,000 people worldwide make an impact that matters at www.deloitte.com.
About Diversified Search
Diversified Search is the largest female-founded firm in the executive search industry, providing management advisory services focused on talent optimization and leadership. Additionally, of the top 50 executive search firms in the U.S., it is the only major firm with an African-American president & CEO. The firm has offices in 11 U.S. cities and worldwide cross-sector capabilities as the exclusive U.S. partner of AltoPartners, an international alliance of independent search firms with 57 offices in 34 countries across the Americas, Europe, the Middle East, Africa, and Asia Pacific. In 2019, Diversified Search was ranked seventh in Forbes magazine’s annual ranking of the best 200 executive search firms in the U.S. For more information, please visit http://www.diversifiedsearch.com/.
About The Executive Leadership Council
The Executive Leadership Council, an independent nonprofit 501(c)(3) corporation founded in 1986, is the preeminent membership organization committed to increasing the number of global black executives in C-suites, on corporate boards and in global enterprises. Comprised of more than 800 current and former black CEOs, board members and senior executives at Fortune 1000 and Global 500 companies, and entrepreneurs at top-tier firms, its members work to build an inclusive business leadership pipeline that empowers global black leaders to make impactful contributions to the marketplace and the global communities they serve. For more information, please visit www.elcinfo.com.
Founded in 1986, the Hispanic Association on Corporate Responsibility (HACR) is one of the most influential advocacy organizations in the nation representing 14 national Hispanic organizations in the United States and Puerto Rico. Our mission is to advance the inclusion of Hispanics in Corporate America at a level commensurate with our economic contributions. To that end, HACR focuses on four areas of corporate social responsibility and market reciprocity: Employment, Procurement, Philanthropy and Governance. For more information, please visit www.hacr.org.
About LEAP (Leadership Education for Asian Pacifics)
Founded in 1982, LEAP’s mission is to achieve full participation and equality for Asian and Pacific Islanders through leadership, empowerment and policy. LEAP works to meet its mission by: Developing people, Informing society and Empowering communities. LEAP is the only Asian and Pacific Islander organization dedicated to cultivating a robust pipeline of leaders by encouraging individuals to assume leadership positions at work and in the community, and ultimately, to become role models for future leaders.
Kori Green, Deloitte Services LP
Jennifer Wotczak, Deloitte Services LP
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