Boardroom diversity has increased somewhat but still has a long way to go, witnesses told the House Financial Services Committee on Thursday.
Chairwoman Maxine Waters, D-Calif., said at the hearing that racial, ethnic and gender diversity on boards is critical for competitiveness, but "corporate and federal boards are not living up to their responsibility to reflect America's rich diversity."
Many organizations have recognized the important of recruiting women and minorities in key positions, but representation still lags, testified Chelsa Gurkin, acting director of the Government Accountability Office's education workforce and income security team.
A GAO report released Thursday identifies several strategies for increasing representation on corporate boards.
Ron Lumbra, a partner in the CEO and board practice at executive search and leadership advisory firm Heidrick & Struggles, testified that there has been "a long-term progression of gender, racial and ethnic diversity at the board director level," citing the 2019 U.S. Board Monitor study of non-executive director appointments on Fortune 500 Boards, which saw a record 40% of new board seats filled by women in 2018 and 23% filled by ethnic minorities. Despite advancement, Mr. Lumbra testified, the total share of diverse directors "is still low."
The GAO report indicates that getting equal representation on boards would take more than 40 years, "so clearly something has to change," said Rep. Carolyn Maloney, D-N.Y., who asked for the GAO study at the request of pension funds and other investors.
"This one simple metric is actually very, very important to investors," she said.
Ms. Maloney, who chairs the subcommittee on Investor Protection, Entrepreneurship and Capital Markets, introduced legislation June 13 that would require public companies to disclose the gender, racial and ethnic composition of their boards of directors every year in annual proxy statements. In addition to creating incentives for change, "we are also empowering shareholders to support companies that embody their ideals and pull investment from those that don't," Ms. Maloney said when introducing the bill.