9 MIN REPORT
We believe disclosing diversity data benefits both shareholders and society
The year 2020 saw a sharp increase in companies’ corporate communications mentioning “racial inequality.” While we applaud the growing awareness, we want to know more about their actions.
Companies that actively encourage diversity, equity and inclusion (DE&I) at every level of their workforce, especially the highest levels, have tended to show better returns. A commitment to DE&I efforts is not only the right thing to do for society, but it also could be best for the shareholders.
Therefore, Capital Group is calling on all companies to disclose specific diversity data that may have been confidential. In fact, U.S. companies with at least 100 employees are required to report the gender, racial and ethnic diversity of their workforce to the federal Equal Employment Opportunity Commission (EEOC). But only 15% of Russell 1000 companies made that information public in 2020.
Greater transparency will provide a clearer understanding of how company management is working to improve their DE&I efforts and measure their results. Having detailed data may improve accountability and incentivize progress, so we encourage disclosure through our research, engagement and proxy voting.
Matt Lanstone, Capital Group’s head of ESG research and investing, and Emma Doner, ESG senior manager, describe their deep dive into diversity data and why it matters.