Russell 3000 Companies Grow Black Directors By 10%, But 60% Still Don’t Have One

As pressure from institutional investors grows to diversify, Nom-Gov chairs should ensure that slates for new directors include diverse candidates.

The number of Black corporate directors serving on the Russell 3000 companies has grown by more than 10 percent since 2019, according to a recent report from BoardProspects, a software platform designed to help corporations recruit board members. While the growth in Black board representation among these companies is encouraging, it frustrates diversity advocates that 60 percent of Russell 3000 companies still don’t have a single Black board member.

Mark Rogers, president and CEO of BoardProspects, says the growth can be attributed largely to a wave of actions stemming from the murder of George Floyd at the hands of the police. He says pressure from Black Lives Matter protests combined with state-sponsored board diversity laws and the more recent proposal by Nasdaq tying listing on its stock exchange to board diversity has helped accelerate appointments of minorities and women across the country.

“There is a growing need to be part of the movement toward racial equality,” says Rogers. “Corporations are starting to understand that one way they can start contributing is by diversifying their workforce and their board of directors.”

The report, “Black Board Members in the Russell 3000,” says that “of the 27,000 board members within the Russell 3000, 5.4 percent are Black, and 60 percent of companies in the Russell 3000 have no Black board members at all.” As disappointing as those statistics are, they represent a major increase in the number of Black board members appointed to boards of Russell 3000 companies over the last two years.

According to the report, “Between 2019 and 2020, 4,145 new board members were appointed in Russell 3000 companies, 422 of which were Black board members, or 10.1 percent, with Black men gaining 58 seats in 2019 and 170 seats in 2020, and Black women gaining 56 seats in 2019 and 138 seats in 2020.”

Although the 10 percent increase in Black board representation is tremendous growth, Rogers expects the growth to continue.

“I think you can expect [Black board appointments] to get to about 15 percent over the next two years,” Rogers predicts, adding, “That may be a conservative view… It could go higher.”

Rogers reasons that many more of the 60 percent of the Russell 3000 companies with no Black board members will add one in the next two years. He expects pressure from institutional investors that want companies to diversify their boards will grab the attention of all white and all male corporate boards.

“If Blackrock, Vanguard and others say they are not going to invest in your company if you don’t have a diverse board, that will change a lot of things,” Rogers says.

While the report doesn’t discuss strategies companies used that led to the increase in Russell 3000 Black board members, there are things boards can do:

Search for diverse candidates with skills that will improve the board’s effectiveness. If your board needs to add someone with technology, finance or specific industry experience make sure to invite diverse candidates who are respected in those areas of need. “Former CEO” is not a skill that is missing from most corporate boards.

When conducting a board search, mandate that search firms send your board qualified diverse candidates. If the search firm you are using says they are unable to find diverse candidates, fire them and select another.

Expand the resources used to find board candidates. To find diverse board candidates it makes sense to reach out to sources that know diverse individuals. “If you are sitting there with an all-white male board, their circle of contacts are going to be just like them – they need to go to other resources to find credentialed candidates to recruit onto their boards,” says Rogers.