The national reckoning on racial equity following the murder of George Floyd has rightly cast a spotlight on boardroom diversity and its lack of representation within corporate America.
To their credit, several states, including Illinois, have taken steps to encourage greater representation of underrepresented groups on corporate boards.
Publicly listed companies headquartered in Illinois must now submit a report detailing their board’s composition to the Illinois Secretary of State at the beginning of every year. The University of Illinois compiles the data and assigns individual ratings, which are due on Monday.
The bill was pared down from a version authored by then-state Rep. Chris Welch, now speaker of the House, that would have required Illinois companies to have at least one woman, African American and Latino on their boards of directors. The legislation signed into law removed those requirements, replacing them with the report card.
Following the passage of these transparency requirements, Illinois experienced an uptick in board diversity as several prominent companies that previously lacked African-American board representation took action. Groupon added Valerie Mosely and Mondelez named Michael Todman to their boards last spring. Valerie Jarrett became the first African American woman appointed to Walgreen’s board in the fall.
Although Illinois is on the right track, we need to do better. Despite pledges by big companies to appoint more members of underrepresented gender and racial groups, little progress has actually been made. And while opponents argue a legislative solution isn’t needed, the numbers tell a different story, revealing that the boardrooms of our nation’s largest companies remain dominated by whites and males.
A study last fall by ISS ESG, the responsible investment arm of Institutional Shareholder Services, found that only 16.8% of 33,000 directors at large-cap companies are minority, and only 27.4% of directors are women.
Illinois can increase corporate transparency by launching an online portal to provide more public access to data. We also should establish disclosure standards on key Diversity, Equity and Inclusion issues, such as business/supplier and workforce figures and community investments.
But the state really should move forward with enacting Speaker Welch’s proposal and follow the leads of other states, which require far more racial and gender diversity.
California recently required publicly held companies headquartered to include board members from underrepresented communities. This follows a mandate that corporations had to have at least one woman on their board by end of 2019 and two women on a five-member board or three women on a six-member board by the end of this year.
Meanwhile, Nasdaq proposed in December that its more 3,200 companies listed on its exchange disclose board diversity statistics and include at least one woman plus another director who is either a person of color or member of the LGBTQ+ community. Many European countries have gone even further.
The board members of large corporations make decisions that impact the livelihoods of working families throughout the country… and in Illinois. It’s time for corporate America to mirror the diversity of our country and to demonstrate that inclusivity, transparency and accountability are reflected in their core values.
Alexi Giannoulias was Illinois treasurer from 2007 to 2011.
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