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Investors want more.

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Investors want more.

More board diversity. More disclosure about board diversity.

Illinois Treasurer Michael W. Frerichs is leading the Russell 3000 Board Diversity Disclosure Initiative. In a recent letter, the Initiative asks Russell 3000 companies to disclose board racial, ethnic and gender data. Twenty-one investor organizations (collective $3 trillion in assets) signed the letter calling on those companies to “consider publicly reporting the racial/ethnic and gender composition of the Board of Directors in your annual proxy statement for the 2021 filing.” The signers called voluntary corporate reporting “the most reliable data source.”

Investors see the positive correlation between diverse boards have and corporate performance. Therefore, investors want increased board diversity and more disclosure about board diversity so they can better assess boards.

To date, companies providing diversity data have usually provided aggregated data. E.g. 22% of our board is female, rather than Jane Smith is Female. Looking ahead, companies may want to provide disaggregated data to investors.

Companies considering doing so may first want to ask their directors whether they self-identify with one or more racial/ethnic groups (typically EEOC groups), self-identify with a gender, and consent to the company making that information public in 2021 proxy statements. Obtaining this information from the directors themselves is good due diligence and allows companies to address any potential concerns in good time. Conveniently, companies can add these questions to the annual D&O Questionnaire.

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