Dive Brief:

• The share of nonwhite directors newly appointed to the boards of Russell 3000 companies is shrinking, the Conference Board said Tuesday, while noting that boards have achieved a record level of demographic diversity.
• The proportion of new Russell 3000 directors who are not white fell to 31% this year from 48% in 2022, while the share of new directors who are Black declined to 12% from 26% during the same period, the Conference Board said in a study co-sponsored by KPMG and Russell Reynolds.
• “Research consistently shows that boards with a diversity of skills, backgrounds and demographics are more effective,” Annalisa Barrett, senior advisor at KPMG’s board leadership center, said in a statement. “Ensuring a pipeline of diverse talent is not just about representation, it’s also crucial for effective board oversight and decision making.”

Dive Insight:

The Securities and Exchange Commission, led by its Division of Corporation Finance, is considering recommending a rule requiring publicly traded companies to disclose more about the diversity of members and nominees to their boards.

The proposed rule has come into doubt — along with other initiatives aimed at promoting environmental, social and governance best practices — since the announcement last month that Gary Gensler will step down as SEC chair on Jan. 20, the inauguration day for President-elect Donald Trump.

Trump and Republican lawmakers for months have criticized the SEC leader for tough oversight, including the agency’s approach toward crypto companies and enforcement of securities laws.

Since taking the SEC leadership post in April 2021, Gensler has championed robust rulemaking in corporate disclosure, Treasury markets audits and other areas of oversight.

In one of his most widely criticized moves, Gensler gained commission approval this year for a regulation requiring companies to disclose the impact of climate change on their finances, operations and business strategy.

In the face of legal challenges — as well as criticism from Republican lawmakers and industry groups — the SEC blunted some requirements of its initial proposed rule and put the regulation on hold pending the outcome of litigation.

The SEC under Gensler also adopted rules sharpening disclosure of cybersecurity risks.

When promoting tougher regulation, Gensler frequently cited pressure from institutional and retail investors for more depth, consistency and uniformity in transparency across a variety of risks and ESG objectives.

This decade the boards of companies in the Standard & Poor’s 500 index have apparently heeded the call for changes to corporate governance.

The share of non-white directors at S&P 500 companies rose to 26% this year from 20% in 2020, the Conference Board said, describing findings from a study also sponsored by ESGAUGE and the University of Delaware’s Center for Corporate Governance.

During the same period, the share of women directors on S&P 500 company boards increased to 34% from 27%, while at Russell 3000 companies the proportion grew to 29% from 21%, the Conference Board said.

“The share of female directors is at record levels, and the growing presence of women on boards has expanded the pool of candidates with the expertise, tenure and relationships required for leadership roles,” Andrew Jones, senior ESG research at the Conference Board and a co-author of the report, said in a statement.

While women hold about one-third of directorships, they chair only about 10% of corporate boards, the Conference Board said.