Chair Beatty Demands Diversity Data Disclosure
WASHINGTON, D.C.—The House Financial Services Subcommittee on Diversity and Inclusion, chaired by U.S. Congresswoman Joyce Beatty (OH-03), conducted a hearing yesterday entitled, “By the Numbers: How Diversity Data Can Measure Commitment to Diversity, Equity and Inclusion.” The Subcommittee’s hearing focused on the importance of diversity and inclusion performance data for investors, policymakers and stakeholders, and explored the need to mandate disclosure to the Offices of Minority and Women Inclusion (OMWIs).
“For more than two decades my colleagues on the Financial Services Committee have offered a persistent call for leaders in the financial services sector to embrace in ‘good faith’ diversity, equity, and inclusion throughout their businesses,” Beatty said to open the hearing. “Good diversity and inclusion performance has been proven to unequivocally increase innovation and profitably, while lowering regulatory risk.” She continued, “Nevertheless, analysis by the Government Accountability Office of diversity performance trends in senior leadership roles from 2007 to 2015 found that the hiring and promotion of African-Americans declined and the rate for women remained unchanged. To address that poor performance and achieve greater accountability, Chairwoman Maxine Waters led the enactment of Section 342 of Dodd-Frank.”
Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank), P.L. 111-203, requires financial regulators to create diversity standards for their regulated entities, including the collection of diversity data. Yet, an overwhelming majority of entities have declined to participate in the annual diversity self-assessment requests. Similarly, many public companies generally have not shared metrics of diversity performance, leaving shareholders and the general public uninformed about the risks associated with investing in a company.
“Congress’ intent was crystal clear: under Section 342, OMWIs were to conduct oversight around D&I performance. However, on average, more than 80 percent of regulated entities have failed to share any metrics with their primary regulator,” Beatty added. “By any measure, the voluntary self-assessment has failed to meet the spirit and intent of the statute. So, I am introducing the Diversity Data Accountability Act, and joining Chairwoman Waters to send diversity data surveys to America’s largest investment management firms.” She noted, “As everyone knows, in the financial services sector—what gets measured, gets done.”
If enacted, the Diversity Data Accountability Act would amend Section 342 of Dodd-Frank to mandate regulated entities disclose their diversity data, enhancing transparency, accountability, and creating a more inclusive economy for all Americans. Also, of note, Beatty-Waters’ letter requesting diversity data was sent to the 31 biggest financial industries who collectively manage more than $47 trillion in assets.