BlackRock CEO Larry Fink sent a letter to CEOs encouraging more diversity on boards earlier this year, and public companies appear to be listening. New data from Institutional Shareholder Services’ ISS Analytics shows that over the first five months of 2018, women accounted for 248 (31%) of new corporate directors at the 3,000 largest public companies in the U.S.—the highest percentage in the past 10 years.
“It’s hard to go anywhere these days where there isn’t an investor emphasis on the issue of diversity, and the easiest place to start is gender,” TK Kerstetter, CEO of Board Resources LLC, and editor at large of Corporate Board Member says.
The public call for increased board diversity from large investment firms such as BlackRock and State Street Global Advisors this year may have had some influence on the new influx of female directors, but the headline-grabbing sexual harassment scandals in the corporate world and the resultant #MeToo movement over the past year may have influenced boards, as well. Corporations are betting that having more women on the board could help to establish a culture that prevents such issues from becoming a problem in the future.
“I think you’re going to see it across all levels—gender, ethnic diversity and the one no one’s talking about: age.” – TK kerstetter
Boards have been slowly embracing the diversity issue, but increased investor interest in this area had kick-started more action from directors as vacancies open up in 2018. Kerstetter says there is no reason to believe the trend will slow any time in the near future.
“It started some time ago, and I think you’re going to see it across all levels—gender, ethnic diversity and the one no one’s talking about: age,” he says. “I think you’re going to see more diverse boards moving forward. As people roll off of boards, it’s going to give [directors] the opportunity to do so.”
The data from ISS Analytics also showed that new female directors were more likely than males to have backgrounds in government affairs, law, technology, finance and sales. While the influx of new women directors this year is encouraging for fans of diverse boards, there is still work to be done at the largest U.S. companies, where women occupy only 18% of director seats.