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Board diversity and race: Commitment or lip service

Despite increasing focus on racism and board diversity the trend is only increasing very slowly

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Diversity refers to differences in skills, expertise, experience, gender, race, age and background. Demographic (gender, race), experiential (abilities, skills) and cognitive factors (approach) are three broad but interlinked types of diversity which affect our identities. Corporate diversity refers to the extent to which the company keeps in view diversity as a factor in its hiring practices.   

Just last year, many brands stated their commitment to diversity as a tool for dismantling institutional racism, following the death of George Floyd. However diversity is not only considered important because it creates a positive public-facing image. Internally, it impacts how stakeholders perceive a business and it is important that the board should represent the diversity of its shareholders and external customers. While the condemnation of racism was appreciated, businesses came under increasing pressure in the corporate world to practically contribute towards ending racial discriminations within their organisations. Increasingly, companies are expected to ensure diversity on their boards – as the change should start from the top for the diversity to transcend down. This change should not be difficult to bring to the board if the commitment to diversity is real. 

One aspect of diversity which is women’s representation on the boards has increased over the years – thanks to pressure from institutional investors and legislative requirements. However, we still have a long way to go in terms of making our corporate boards racially diverse. 

Stats by the Registry of Corporate Directors reflect that 13% of the population of Black Americans have no representation in 37% of S & P 500 companies (a 2% improvement between 2018-19).

Based on the findings of the 2019 Annual Corporate Directors Survey, Directors who support the board’s racial/ethnic diversity fell from 34% in 2018 to 26% in 2019. 58% Directors feel that investors place too much focus on board diversity (up from 33%). Only 17% of directors support laws mandating diversity.

Missing Pieces Report: The Board Diversity Census of Women and Minorities on Fortune 500 Boards found that 82.5% of directors on boards of Fortune 500 companies and 81% of new members between 2016-2020 were white. Minority directors rose from 14.4% to 17.5% between 2016-20 which is slightly higher compared to the increase in the last six years (at 13.3 % in 2010). One of the concerning findings was that between 2018 and June 2020, Black men on the boards fell by 1.5% though Black women increased by 18%, which supports the fact that focus on racial diversity is beginning to get some momentum only recently.

An analysis by ISS Corporate Solutions, Inc. (ICS) found that during July 2020 to May 2021, of all the newly appointed directors, 32% were Black, rising from 11% last year. This change is more visible in larger companies. 

Despite increasing focus on racism and board diversity the trend is only increasing very slowly. One possible explanation for this is the lack of diversity in controlling key roles. Even if the directors from the minority racial groups are equally qualified they are less likely to be given a leadership role which may potentially be due to bias according to a study. 

It is true that the criteria for appointment at board level is competence and is driven by the interest of the company and its shareholders. However, the evidence as of now suggests that board diversity adds to performance, and the lack of diversity is merely rooted in bias. A study of 366 public companies in the UK, US, Canada, and Latin America revealed that companies who are in the top quartile of racial diversity are 35 % more likely to outperform their counterparts in lower quartile. 

Some states in the US have either passed laws or are considering laws mandating board diversity or disclosure of board diversity. For example in California, since 2019, boardroom gender diversity laws require companies to ensure a minimum number of female directors. A new law for companies headquartered in the State of California requires that at least one member on the board should be from any underrepresented groups by the end of 2021. 

There are objections and concerns to such laws as well. It is said that change will come voluntarily and a one size fits all legislation will not serve any real purpose. People of colour don’t want to be appointed for the colour of their skin but in genuine recognition of their qualifications. However, it is worth mentioning that for a change to happen, mandatory requirements are helpful and seem inevitable in speeding up the change which has been long overdue. We have seen that over the last 10 years, board diversity is not improving considerably as one would wish.   

Without mandatory disclosure requirements about the board’s diversity composition, it’s not easy to obtain data. The mandatory disclosure of board composition by companies will help the push for diversity. NASDAQ (global virtual Marketplace) has proposed a new rule requiring companies to disclose their board diversity and to have at least one member from an underrepresented minority, or provide an explanation. If approved by the US Securities and Exchange Commission, all companies listed on NASDAQ’s US exchange will be required to make this public disclosure and comply. 

Goldman Sachs in 2020 announced that they will underwrite Initial Public Offering (IPOs) of private firms in the US and UK, only if they have a diverse board, and this requirement is increasing to two diverse members from July 2021 one of which must be a woman. There is no specific number requirement for racial diversity.

The Black boardroom initiative is an initiative by a law firm that is working to ensure the presence of black board members on S & P 500 firms, at least one eighth of the total by 2028.  Deloitte, Amazon, Microsoft, and Zillow are supporting this initiative which has started their work in Washington State. 

Investment management corporations like BlackRock Inc. are urging companies to improve on diversity. Another such firm, State Street Global Advisors, is starting to vote against nomination committee chairs where S & P 500 company’s boards lack diversity disclosure. However, in most cases a minimum number of minority directors have not been prescribed. Another report of all the companies, 178 had no black directors as of their 2020 annual meetings, BlackRock had voted for 163 and Vanguard supported 166 through their vote. 56% of all S & P 500 companies by November 2020 had all white boards and major asset managers like Black Rock voted to approve boards of 52 of these companies. Vanguard approved 51. 

These alarming figures show that a lot of work still needs to be done as there still continues to be a lack of racial diversity across boards. It is important to promote the essence of diversity and instead of having the same minority board members on multiple boards, the pool of diverse board members should be expanded. Improving the board’s racial diversity will require consistent and sincere commitment from the top. 

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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1 Comment

1 Comment

  1. Sultana Bhatti

    10 July 2021 at 1:50 pm

    Positive work quotas have got to be the way forward to trigger change. If only 17% of directors support mandatory board diversity, then that’s a real problem

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World

Melbourne to come out of lockdown after 262 days

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The city of Melbourne, Australia will come out of lockdown this Friday after reaching a vaccination rate of  70%. This Australian city has spent time under the Covid-19 lockdown more than any city in the world, totaling 262 days.  

The lockdown will end five days earlier than was anticipated due to the high vaccination rate. The state’s premier, Daniel Andrews made the announcement on Sunday, stating “as of 11.59 pm Thursday there will be no lockdown, no restrictions on leaving home and no curfew.” This is the city’s sixth lockdown which is ending after 73 days, due to the goal of 70% of people over 16 being double-dosed being reached.

According to Victoria’s reports, there were 1,838 new Covid-19 cases and seven deaths in the city on Sunday so people will not be able to visit regional Victoria even after the lockdown restrictions are lifted. This lifting of lockdown means “ten visitors, including dependents, will be able to visit a home each day. Outdoor gatherings will increase to 15 people. Up to 20 fully vaccinated people will be allowed inside at hospitality venues with 50 outside, subject to density limits.” Moreover, schools will open physically, at least on a part time basis as well as some traveling restrictions being lifted.

Melbourne will also ease even more restrictions when 80% of the population is vaccinated. As Andrew said “today is a day where every Victorian should be proud,” adding “it is absolutely amazing to be this closely aligned to New South Wales. To be only just a couple of weeks behind NSW, when we know and understand just how much extra vaccine went there, is a credit to every single Victorian.” In fact, he also said that “I don’t think it will stop at 90 percent. There is not a ceiling, I think it will creep beyond that and maybe get to 92 percent, 93 percent, 94 percent even. But every jab, every person, every percentage point that is fully vaccinated, that is literally tens of thousands of people less getting sick and finishing up needing hospitalization.”

It is great to see a country coping with Covid-19 in a proper way. It was a combined effort of public and health officials that helped Melbourne finally come out of lockdown. Hopefully, other countries will also see such success in vaccination rates so Covid-19 can successfully be controlled.

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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World

Peak Australian Islamic body cancels online discussion with Taliban guest speakers

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A now-cancelled online event organised by the Australian Federation of Islamic Councils (AFIC) was advertising a ‘stellar panel of speakers’ of which two of the speakers are members of the Taliban. The event planned to discuss the future of Afghanistan following the Taliban’s swift takeover “whether we are in favour or against recent developments.” Less than 24 hours after the news broke, AFIC cancelled the event with President Dr Rateb Jneid claiming they were not seeking to “legitimise any group or to offend any group.” Its Chief Executive Keysar Trad also claimed they do not wish to “create any angst for anybody” but said the event was to “obtain assurances about the rights of minorities and women and to also dissuade and discourage any young people from going to that region.” 

Nonetheless, the scheduling of the event garnered condemnation from all levels and political stripes of the Australian government, with the New South Wales (NSW) premier Dominic Perrottet and Multiculturalism Minister Natalie Ward jointly stating that “we join Muslim community leaders in NSW, and especially Afghan community leaders, in condemning events of this kind” with the opposing Labor party’s police and counter-terrorism MP Walt Secord branding the event “a road map to radicalisation.” The conservative federal MP Phillip Thompson described the Taliban as “vile and barbaric” for the inhumane rule and their opposition to equal education for women and girls. Before parliament, Mr Thompson served in the military and was severely injured by an improvised explosive device in Afghanistan and said the event would upset war veterans

Beyond the politicians, the event angered activists like refugee advocate Sitarah Mohammadi, who fled Taliban rule in the 1990s with her family due to them being a part of the Hazara minority, who are heavily persecuted by the Sunni Taliban. When the Taliban took over and regained control over Afghanistan this year, no other group felt in danger as much as the Hazaras did. To people like Sitara, giving the Taliban a platform is “completely inappropriate” especially with the memories of the Taliban’s torture from the 1990s still fresh in Hazara communities.

The two Taliban speakers for the event were Suhail Shaheen and Sayed Abdul Basir Sabiri. Doha-based Shaheen has not ruled out returning to harsh punishments such as stonings and public executions and was named as the Taliban’s representative to the United Nations while Sabiri is a senior Taliban member.

The Taliban’s struggle for global recognition and diplomatic relations with Western countries is still unsuccessful. Yet the fact that some Western Muslim leaders are open to hosting them on a panel discussion and using the Taliban’s official name the ‘Islamic Emirate of Afghanistan’ in their advertising shows that withdrawing military forces is not the end of the war. The new frontier in tackling such extremism is now in the disinformation space and cyberspace. Two places which, if left unregulated and unmonitored, could drag Western governments back into another ‘endless war’.

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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Economics

Economic catastrophe places Afghanistan in crisis

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Αντώνης Σαμαράς Πρωθυπουργός της Ελλάδας from Greece, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

Due to severe poverty and disorganisation, Afghanistan has faced an economic collapse especially after the Taliban takeover on 15th August 2021. Moreover, the growing humanitarian crisis affects half the population as well.

The UN secretary, General Antonio Guterres spoke to reporters in the UN headquarters where he said “the international community must find ways to inject cash directly into Afghanistan’s economy to avert its total collapse as a growing humanitarian crisis impacts half the population.” In addition to that, he also discussed how the Taliban had broken promises by saying “broken promises lead to broken dreams for the women and girls of Afghanistan,” on Monday.

The EU foreign policy chief, Josep Borell said in an interview on Monday with a Spanish newspaper, El Pais “we thought we would have an acute (migration) crisis because of Afghanistan, but it has not yet happened. And it will not happen if we prevent the economic collapse of the country. 75 percent of the Afghan budget comes from foreign transfers. And now they are all frozen”. He also added that “economic collapse can occur. We have to prevent it, without recognizing or supporting the government as such.” This discussion took place across countries when the UN urged the world leaders to put money into the Afghan economy to save the country. After this discussion, the German Chancellor, Angela Markel stated that the country should not “descend into chaos.” Whereas, US President Joe Biden stressed that the aid given to Afghanistan should be via independent international organizations.

So far the money provided to Afghanistan has been in millions which can only cover the emergency needs. However, Guterres told reporters that a massive UN humanitarian aid operation is underway in a race against time so aid can reach before the winter months. According to him any measure that includes channeling the cash through the Taliban should be avoided at all costs. This is because after the Taliban takeover, the banks were closed for several days and even when they opened accessing cash was still difficult. In addition to that, due to many business owners leaving the country to escape the Taliban, the employees are without salary whilst the prices of necessities continue to increase. Furthemore, women can no longer work to support their families. This is all mostly due to the Taliban takeover.

The UN and the global community are trying to reach and help the people of Afghanistan without recognising a Taliban government, which is quite difficult. Many people are stuck in tents while winter is approaching so if something is not done immediately the people will suffer. This is of course, very difficult because the money needs to reach the people and not the Taliban. It is hoped that the UN can help provide a solution which will help the people of Afghanistan soon. 

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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World

Workers in the United States quit jobs in record numbers

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AgnosticPreachersKid, CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0, via Wikimedia Commons

The number of Americans leaving their jobs voluntarily reached a record high. According to the data, there were 10.4 million job opportunities in the country at the end of August 2021, a tiny decrease from July’s record high of 11.1 million, but still a staggering number. The amount of people quitting their jobs has reached an all-time high, owing to a confluence of variables such as Americans seeing sufficient opportunity and greater income elsewhere. Workers who are less willing to put up with inconvenient hours and low pay are driving the phenomena, with many resigning at this point of the pandemic in search of better opportunities elsewhere. The number of people quitting their jobs, and the increase in job openings, has become a growing source of concern for the country’s economic recovery.

According to the recent figures released on Tuesday by the Department of Labor, 4.3 million people left their employment in August, accounting for about 2.9% of the workforce. That equates to approximately 3% of the labour force. According to the study, hiring also slowed in August, with the number of open jobs falling to 10.4 million from a record high of 11.1 million the previous month. There is a degree of confidence from workers who believe they would be able to find a job elsewhere, yet labour dynamics have changed since the Covid-19 crisis. Workers have left their employment because of virus fears, a lack of child care options, health concerns and other challenges that have arisen as a result of the pandemic’s circumstances. Moreover, Teachers across the country are resigning or retiring early as schools reopen for the new academic year, and Covid-19 cases among children have risen over the last week, despite some states prohibiting mask mandates. A high rate of individuals leaving jobs indicates how optimistic American workers are about their career prospects. However, a closer look at the data reveals that workers may be avoiding work because they are afraid of getting the Delta version of Covid-19.

This is an interesting movement. Workers demonstrate their confidence in the future by leaving their jobs. It also indicates that there are enough jobs available that if the transfer does not work out, they will be able to locate to another job reasonably easily. 

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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World

Tesla’s Berlin Gigafactory to begin production by year’s end

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Following a record third quarter for Tesla, CEO Elon Musk announced the start of production at the new Berlin Gigafactory on Saturday 9th October. “We’re aiming to start production in a few months, basically, November or December, and hopefully deliver our first cars in December” said Musk at the Oktoberfest-style County Fair held on site in Gruenheide. 

The factory will begin making Model Y cars in addition to millions of battery cells. Tesla has submitted plans to invest 5 billion euros in a battery plant with 50GWh capacity. Musk added that he’s hoping the plant will be producing between 5,000 and 10,000 vehicles per week by the end of 2022. 

Berlin Gigafactory still needs a final approval to start production and faces opposition from the locals due to environmental concerns regarding the factory’s water use and disruption to wildlife. Construction was started two years ago after getting the go-ahead from the authorities under an exception. The company does however enjoy good support among the German political parties as Tesla will be adding significant jobs to the European economy and Brandenburg’s Economy Minister has put the chances of the factory gaining operational approval at 95%. The latest consultation on public concerns towards the site closes today (14th October), after which the Environment Ministry will make a decision. If the approval is granted, it will allow Tesla to grow significantly in Europe and increase production of its cars.

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Figure 1: Tesla’s new Structural 4680 battery. Credit: Tesla & Battery Associateshttps://energycentral.com/c/cp/tesla-battery-day-one-slide

Tesla also unveiled its new structural battery pack with 4680 cells during the tour of the Gigafactory. 4680 refers to the dimension of the cell with each cell being 46mm in diameter and 80mm tall and was first announced during the company’s Battery Day event last year. Tesla has previously used 21650 cells in its battery packs which are mass produced and are also found in laptop battery packs. These cells are combined to form modules which are then put together in a battery case to form a battery pack. By moving to a bigger 4680 cell, no module assembly is required and the entire battery pack can provide the structural platform for the car. This battery pack design is simple and results in a more efficient and cheaper battery pack that is easy to assemble, has less parts, less mass and improves the manufacturing process. 

During the Battery Day event last year, Elon Musk compared the structural battery to fuel tanks in an aircraft. “All modern airplanes, the fuel tank, your wing is just a fuel tank and wing shaped,” he said. “This is absolutely the way to do it. And then the fuel tank serves as dual structure, and it’s no longer cargo. It’s fundamental to the structure of the aircraft — this was a major breakthrough. We’re doing the same for cars.” Seats can be directly mounted to the structural battery pack which reduces mass and simplifies the assembly process of Tesla’s cars. 

Getting a first glimpse of these packs was definitely the highlight of the event and shows how close Tesla is to pushing the limits of batteries in electric vehicles even further. Elon Musk also defended the factory against the critics of its environmental impact, saying that it used “relatively little” water and that battery cell production is “sustainable”.

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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World

Abdul Qadeer Khan: ‘Pakistan’s nuclear hero’ dies at the age of 85

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Abdul Qadeer Khan was known as the father of Pakistan’s atomic bomb and nuclear weapons program. He died at the age of 85 due to complications related to Covid-19. 

Dr. Khan was known as a national hero as he turned Pakistan into the first Islamic country with nuclear power. He was known for setting up the first nuclear enrichment plant at Kahuta, a place near Islamabad. Due to his contributions by the year 1998, Pakistan had conducted its first nuclear tests. The Prime Minister of Pakistan, Imran Khan tweeted that “he was loved by our nation (because) of his critical contribution in making us a nuclear weapon state.” Moreover, Pakistan’s Information Minister Fawad Choudhry stated that Dr. Khan’s “services for the nation and his contributions for strengthening Pakistan’s defense will always be remembered.” Due to his contributions, Pakistan was the world’s seventh nuclear power country which made it up to par with India, a rival country. However, his fame only lasted in his country. 

In the west, Dr. Khan was thought to be a dangerous renegade for sharing his found technology with other rogue countries including Iran, North Korea, and Libya. After this accusation, he was pardoned by then-president Pervez Musharaf. However, due to the pressure from the US, the Pakistani authorities placed him under house arrest in 2004, which lasted till 2009. Although he was supposedly free, his movements in and out of the country were still heavily monitored closely by the security agencies. According to the US state department “(Dr. Khan has) irrevocably changed the proliferation landscape and have had lasting implications for international security” because he ran an “extensive international network for the proliferation of nuclear equipment and know-how that provided ‘one-stop shopping’ for countries seeking to develop nuclear weapons.” 

He was buried as he requested at Islamabad’s Faisal Mosque on Sunday 10th October 2021 with “full honors” according to the interior minister, Sheikh Rashid Ahmed. The funeral was attended by thousands of mourners in the pouring rain including General Qamar Javed Bajwa, Pakistan’s Chief of Army Staff. 

The death of an individual who dedicated his life to shape Pakistan is devastating but his memory continues to live on through his key achievements and will always be remembered as a national hero. 

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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