By Isla Binnie
NEW YORK (Reuters) – Following the killing of George Floyd in 2020, investor Mellody Hobson recalls frequent calls from directors of Fortune 500 companies for references to various candidates for boards. Now, he says, it's “very intermittent.”
“During the days of George Floyd there were dozens and dozens of them,” said Hobson, co-CEO of Ariel Investments who also serves on the boards of JPMorgan> and Starbucks. “Those applications have dropped dramatically.”
Over the past year, Reuters and other media have reported that a backlash against diversity, equity and inclusion (DEI) policies by some conservative activists has fueled corporate enthusiasm for them.
Interviews with directors and corporate advisors as well as a recent study on corporate boards give a clear picture of how obvious the result of that backlash has been.
Among Russell 3000 companies, the number of new Black directors fell to 12% in 2024 from 26% two years ago, according to a study by business research group The Conference Board and data company ESGAUGE. At the same time, the number of new white directors bounced back to 69%, up from historic lows of 52% in 2022.
Directors and board advisers said a conservative backlash through litigation and other means has pushed DEI policies down the priority list for companies, often in subtle ways — a trend that some experts said could accelerate under the new Donald Trump administration.
“It's not a non-issue, it's not THE issue,” Hobson said, referring to how companies were now thinking about diversity on their boards. Over the long term, “we will continue to move in the right direction,” he said.
One recruiter, for example, said many companies no longer made diverse candidate slates a primary requirement when looking for directors.
“A few years ago there were more searches in one or two criteria than there are now,” says Richard Fields, head of the board effectiveness practice at search firm Russell Reynolds.
DEI's policies got a boost after the killing of Floyd by a white police officer sparked a national outcry and energized the Black Lives Matter movement.
Investors and their advisory firms used their shareholder power to push companies to include people from different backgrounds in senior roles, and companies hired more diverse board members.
The efforts resulted in greater gender and racial diversity among the directors of major US companies than ever before. About 12% of directors on S&P 500 boards are now Black.