February 14th 2024.
Written by Matthew Scott, the annual "Power in the Boardroom" report has been released by the editors of BLACK ENTERPRISE. This report includes the exclusive 2023 B.E. Registry of Corporate Directors, which lists the Black individuals serving on corporate boards. As we continue to push for greater diversity in the boardroom, we have reached a critical turning point.
This marks our 10th year of examining the representation of Black individuals in corporate governance, and once again our team at BE has thoroughly researched all S&P 500 companies to provide a comprehensive overview of diversity at the highest level. The data we have collected paints a revealing picture of Black representation in the boardroom. In 2023, there were 490 Black corporate board members at 420 different corporations, compared to 474 Black directors at 421 companies in 2022. This means that 84% of S&P 500 companies now have at least one Black director, a significant increase from 60% in 2016 when we first began reporting on board diversity across the entire index.
While there has been progress in recent years, reports indicate that this progress has slowed down. According to a joint report from the 2023 KPMG Board Leadership Center and the African American Directors Forum, there was a spike in the number of Black individuals appointed to Fortune 1,000 company boards following the tragic murder of George Floyd in May 2020. However, the report also shows that there has been a decline in new appointments since then. As of September 2022, 76% of Fortune 1,000 companies had at least one Black director, compared to 61% at the end of 2020. But, of the Black directors who were appointed during this time, 40% joined after June 2020, 28% joined between September 2020 and September 2021, and only 9% joined between September 2021 and September 2022. This suggests a decrease in the rate of new appointments.
In addition, a report from Spencer Stuart reveals that Black directors made up only 15% of newly appointed directors at S&P 500 companies in August 2023, a decrease from 26% in the same period in 2022.
The past year has also seen a rise in legal challenges against diversity, equity, and inclusion policies. These challenges have been successful in striking down some policies, causing experts to debate the impact this will have on the appointment of Black individuals to corporate boards. Denise Hamilton, a DEI strategist and CEO of WatchHerWork, a digital platform for professional women, believes that corporations are now fearful of lawsuits and this has led to a pullback in diversity programs, including board inclusion. Dail St. Claire, an independent director at renewable energy company Verde Clean Fuels, adds that recent court decisions in California, which struck down laws mandating minimum representation for women and underrepresented groups on corporate boards, will likely result in a slowdown in the appointment of Black individuals to these boards. St. Claire acknowledges that the California law was ambitious, but adds that it did lead to increased diversity on boards and in the workforce.
Hamilton believes that these legal challenges, along with other cases nationally, are part of a coordinated effort to undermine diversity initiatives. She states that the goal is to set a precedent for future lawsuits against corporations with deep pockets, in order to stop all diversity programs and initiatives from happening.
Written By Matthew Scott
As the editors of BLACK ENTERPRISE, we are proud to present our annual “Power in the Boardroom” report. This year's report includes our exclusive listing of Black board members, known as the 2023 B.E. Registry of Corporate Directors. It is an honor to be able to showcase the progress and challenges surrounding Black representation in corporate governance.
In the past decade, efforts to increase the number of Blacks in boardrooms have reached a significant crossroads. This editorial package marks our 10th review of Black representation within corporate governance. Our team at BE has once again conducted extensive research on the universe of S&P 500 companies in order to provide a comprehensive picture of diversity and inclusion at the highest level.
The data from our research has revealed some notable insights into the current state of Black boardroom power. Among the S&P 500, there were 490 Black corporate board members at 420 corporations in 2023. This is a slight increase from the 474 Black corporate directors at 421 companies in 2022. This means that 84% of the S&P 500 now have Black directors, a significant increase from the 60% reported in 2016, when BE first began reporting on board diversity across the entire index.
However, our findings also show that while progress has been made in recent years, it seems to be slowing down. According to a report from the 2023 KPMG Board Leadership Center and the African American Directors Forum, there was a significant increase in the number of Black directors appointed to Fortune 1,000 companies following the murder of George Floyd in May 2020. However, the percentage of new appointments has declined since then. In fact, only 9% of Black directors joined Fortune 1,000 boards between September 2021 and September 2022, compared to 28% between September 2020 and September 2021, and 40% after June 1, 2020.
This decline in new appointments is also reflected in a report from Spencer Stuart, which found that only 15% of newly appointed directors in S&P 500 companies as of August 2023 were Black. This is a significant drop from the 26% of new appointments in the same period in 2022.
One factor that may be contributing to this decline is the recent court decisions and backlash against diversity, equity, and inclusion (DEI) efforts. Some experts believe that these decisions, including the suspension of Fearless Fund's exclusive financial support for Black women-owned businesses, may have a chilling effect on diversity programs and policies, including board inclusion. This fear of litigation may be causing corporations to pull back on their efforts to promote diversity and inclusion.
Dail St. Claire, an independent director at Verde Clean Fuels, believes that the recent court decisions to strike down California's laws that mandated diversity on corporate boards may also slow the appointment of Black directors. She argues that these laws, which included quotas for underrepresented groups, created a false belief that unqualified candidates would take positions away from qualified ones. However, St. Claire also acknowledges that these laws did lead to increased board diversity and policies that promoted a more diverse workforce.
On the other hand, Denise Hamilton, a DEI strategist and CEO of WatchHerWork, believes that these recent court decisions are part of a coordinated effort to reverse the progress made by DEI initiatives. She sees them as setting a precedent to challenge corporations with deep pockets and stop diversity programs and initiatives from happening.
As we continue to navigate these challenges, it is important to recognize the progress that has been made and the work that still needs to be done. We at BLACK ENTERPRISE are committed to highlighting the achievements and obstacles facing Black representation in corporate governance and will continue to monitor and report on these important issues.
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