Boardroom diversity is a topic that has gained significant traction – with institutional investors, among good governance proponents, and in the general and business media. The conversations have touched on various aspects of diversity, including gender, race/ethnicity, age, industry, and expertise.
As Out Leadership explored in a recent webinar entitled “Do LGBT+ Directors Count on Fortune 500 Boards,” LGBT+ diversity has largely been left out of the conversation on board diversity. Indeed, a 2017 survey by Out Leadership identified fewer than 15 openly LGBT+ directors on Fortune 500 company Boards, constituting less than 0.3% of directors on those Boards and significantly under-representative of the overall LGBT+ population in the U.S.
Perhaps even more concerning, only three companies in the Fortune 500 explicitly include sexual orientation in the definition of board diversity in their nominating guidelines for board members, lagging far behind other historically under-represented groups.
Boards that lack a LGBT+ lens on their business may overlook important risks and opportunities. Quorum, Out Leadership’s initiative to increase LGBT+ representation on corporate boards and drive the conversation around the business benefit to greater inclusion in the boardroom, was launched to address this gap.
Quorum sponsor KPMG has been a strong partner in driving this conversation forward. Susan Angele, who moderated the webinar and serves as a Senior Advisor at KPMG’s Board Leadership Center, noted that “the research is very clear that when you have a group where there are differences in backgrounds, in perspectives, whatever measure of diversity you want to look at, the decision making is just better.”
Paul Wendel, Manager of Talent Initiatives at Out Leadership who leads Quorum, further explains, “Having greater LGBT+ diversity at the board level has a direct impact on the policy and culture within an organization. Visible LGBT+ leadership is a key component to creating an inclusive work environment. And this helps companies attract and keep the best talent.”
Quorum recently launched Board Diversity Guidelines: “Policy in a Box,” which provides best practice recommendations for how companies can go about the process of amending their corporate governance language around diversity to include LGBT+ diversity. The “Policy in a Box” gives guiding language for including sexual orientation in nomination guidelines, examples of current company best practices, and presents the business case for LGBT+ inclusion on corporate boards.
Matt Fust, Senior Advisor to Out Leadership, captures the unfortunate reality and need for this initiative, stating, “Disappointingly less than 2% of the Fortune 500 specifically call out sexual orientation as a category of director diversity that they consider. This translates into only 7 companies in the Fortune 500 who mention sexual orientation at all in their board selection guidelines.”
U.S. public companies typically review criteria for board composition annually, yet board composition guidelines often remain unchanged from year to year without an internal request for change or an external catalyst, and even when corporate boards mention sexual orientation, there are varying degrees of implementation or consideration.
Beth Ising, who co-chair’s Gibson Dunn’s Corporate Governance practice group, noted, “Not all companies provide the information about the diversity that is on their board. And so sometimes it can be hard to judge.” The Policy-in-a-Box provides a tactical solution for these companies.
For more information about Quorum or to receive a copy of the Board Diversity Guidelines “Policy-in-a-Box,” please contact Paul Wendel at firstname.lastname@example.org.