Quotas, Even at the Top

Merck has a diverse corporate board.

The WSJ reports on one of the ESG (environmental, social, governance) movement's principal initiatives: racial and sexual diversity of corporate boards of directors. [bold added]

U.S. public companies added the most diverse slate of new directors on record to their boards over the past year, with a surge of Black nominees and elevated numbers of women and first-time directors, according to two new studies.

The gains were uneven, with about half of public-company boards adding no new members and smaller companies lagging behind their bigger counterparts, according to one of the studies, from the Conference Board and data analytics firm ESGauge. In addition, more companies of all sizes have started disclosing the racial and ethnic makeup of their boards.

The second study, by executive and board recruiting firm Spencer Stuart, found that a third of new independent board members for S&P 500 companies identifying director demographics were Black, up from 11% the year before, and 7% were Latino, up from 3%.

To this cynical boomer, diversity "gains" defined by how many boxes are checked are redolent of unwritten affirmative action quotas that did little to advance group welfare--which the AA advocates (unwittingly) admit because they proclaim that the income/wealth/health gaps have only gotten worse in the decades since AA was implemented.

No one is looking at whether diversity is improving corporate decision-making---if researchers are, it's not mentioned in the article. A clearer picture will emerge when stock-price and other financial indicators measure the performance of companies that have diverse boards and those that do not.

In any event change will be slow because attrition of board members is gradual:

The rapid addition of minority directors has been slow to diversify overall board demographics in part because of low turnover. Nearly 40% of S&P 500 companies didn’t change their boards over the past year, and about half of the companies in the S&P MidCap and Russell 3000 indexes didn’t, the Conference Board found.

A good thing about diversity that may really be a bad thing:

First-time directors are less likely to be retired and more than twice as likely to be under 50 years old, Spencer Stuart found. About two-thirds of these younger directors are from historically underrepresented racial or ethnic groups.

[Blogger's comment: personally, I'd rather have qualified under-50 women and minorities running a dynamic company than overseeing three or four.]