Good morning. Goldman Sachs got some unwanted attention yesterday for its reported plans to scrap DEI criteria for its board, about a year after erasing diversity goals for its workforce. Many other companies have done the same amid a federal crackdown and several state lawsuits over corporate DEI efforts. (Starbucks won a dismissal last week after Missouri challenged its DEI initiatives, freeing up time to battle a recent suit in Florida.)
When asked, every CEO tells me that they remain committed to creating a diverse, equitable and inclusive workforce, even if those words are being erased from public documents. They cite the studies that diverse teams perform better, arguing efforts continue behind the scenes. They just don’t want to talk about it. One exception is Costco CEO Ron Vachris who continues to publicly affirm the retailer’s commitment to diversity even as rivals have scaled back.
Boards are another matter. Investors want results. Along with setting CEO compensation, directors manage succession and hold management accountable. U.S. boards tend to be more diverse than the companies they oversee, with white men occupying fewer than half the board seats on Fortune 50 boards for the third year in a row. But that’s changing, as the Conference Board reports that the number of companies disclosing directors’ race and ethnicity in the S&P 500 has dropped dramatically, and ISS-Corporate reports white men made up the majority of new directors in that group for the first time since 2017.
