Despite gains in representation in recent years, no Fortune 500 company board fully represents the demographic population of the U.S., according to a June 15 report from Deloitte and the Alliance for Board Diversity.
Nearly 45% of women and underrepresented racial and ethnic groups held Fortune 500 board seats in 2022, which is up from 38% in 2020. At the same time, the pace of change remains inconsistent and uneven across demographics, and boards still have a long way to go to be fully representative.
“The findings from this year’s report show gradual steps in the right direction, but at this pace, U.S. top corporate boards might not represent the nation’s population until 2060,” Carey Oven, national managing partner of Deloitte’s Center for Board Effectiveness, said in a statement.
“Board diversity and inclusion isn’t only the right thing to do; it is a business imperative that builds broad stakeholder trust that ultimately can lead to better business outcomes,” she said.
Although 55% of Fortune 500 board seats are still held by White men, women have seen gradual increases. In 2022, women held more than 30% of board seats, up from 26.5% in 2020. In addition, Black women had a 47% increase, gaining 86 board seats in the past two years. Asian and Pacific Islander women had a 27% increase and gained 24 seats. Hispanic women and Latinas saw a 23.7% increase and gained 14 seats.
Underrepresented racial and ethnic groups have made some gains as well, increasing from 17.5% of board seats in 2020 to 22.2% in 2022. Specifically, Black board members grew from 8.7% to 11.9%, Asian and Pacific Islander board members grew from 4.6% to 5.4% and Hispanic and Latino board members grew from 4.1% to 4.7%.
At the Fortune 100 level, the trends are slightly better, with 46.5% of board seats being held by women or underrepresented groups. However, the rate of change is slower. The share of women and underrepresented board members increased by 44.9% for the Fortune 100 during the past decade, as compared with 67% for the Fortune 500.
Across the Fortune 500, 53 companies now have greater than 60% of board seats filled by women and people from underrepresented racial and ethnic groups, which is the highest level to date. Compared to the U.S. population, 16 companies have boards with 50% women, 13 companies have 18% or greater Hispanic and Latino representation, 204 companies have 13% or greater Black representation and 211 companies have 6% or greater Asian and Pacific Islander representation.
“Hispanic/Latino(a) board representation has remained relatively flat since 2004. By 2060, the Hispanic population will be almost 30% of the nation’s population, yet fewer than 5% of corporate board positions are held by Hispanics, which makes us the community with the largest disparity of board representation compared to our population and economic influence,” Cid Wilson, chair of the Alliance for Board Diversity and president/CEO of the Hispanic Association on Corporate Responsibility, said in the statement.
More broadly, gender diversity on corporate boards appears to be increasing each year, according to a recent report. For instance, in 2022, women represented 41% of the new director appointments to Russell 3000 Index companies and only 17% of those leaving.
In addition, S&P boards are becoming more diverse, according to another new report. Among the 395 new independent board directors appointed in 2022, 74% came from outside the executive team, and of those, 72% were women or from underrepresented groups. Due to low boardroom turnover, however, transformation can be slow, with new directors accounting for about 7% of S&P 500 directors.
Paying attention to board representation can pay off for the bottom line, according to a recent study. Investment in environmental, social and corporate governance principles is associated with higher profits — especially if employers include social and governance issues, such as board diversity.