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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

The world rushes to help Tonga as the volcanic ash settles down

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On 15th January 2022, the thick smoke and ash from a volcanic eruption of the Hunga Tonga-Hunga Ha’apai volcano shrouded the Island and made it impossible to reach. After more than five days, humanitarian aid has now started to reach Tonga. The world is coming together to provide the people stranded on the Island with drinkable water and basic supplies. Much of the island still does not have proper means of communication and connection to the world and almost 80% of the population have been reported to be affected by natural disaster. 

Australia and New Zealand, being the nearing Islands, are on the frontline for sending aid for the disaster-stricken Tonga. Flights carrying power supply units, hygiene and sanitation product as well as the supplies for purifying water are being flown away to Tonga. While the disaster broke off the communication, The Naval forces of both Australia and New Zealand have set out their vessels from HMAS and HMNZS to provide assistance in the rescue efforts. 

According to a statement released by Nanaia Mahuta, The Minister for Foreign Affairs: “Communication issues caused by the eruption have made this disaster response particularly challenging. The delays mean we have taken the decision for both Wellington and Aotearoa to sail so they can respond quickly if called upon by the Tongan Government”. The two ships will also be carrying aid funded by the UK in addition to the UK’s promise of providing 6 million dollars assistance to the Disaster Relief Emergency Fund. 

China has also decided to send basic supplies and the cash relief of $100,000 for Tonga while Japan has sent the 1 million dollar aid with the supplies to wash away the ashes off the Island. The assessment teams by the UN are visiting the Islands to gather the report of the damage done by “atomic bomb” like eruption. According to the reports, about 12,000 households have been affected by the disaster with the impact of it reaching beyond Tango to Peru. The oil spill caused by the tsunami and the volcanic eruption has been declared the “worst ecological disaster” and, according to the foreign minister of Peru, have caused “serious harm to hundreds of fishermen’s families”

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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Politics

France closer to hijab ban in sports

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France takes another step towards Islamophobia by trying to ban hijabs in sports competitions. The French senate has already voted in favor of this on late Tuesday but it is still unclear if this ban will be implemented in the 2024 Paris Olympics. 

The senate decided that the hijab affects the neutrality of the field play. The law that they are trying to pass states that wearing anything “of conspicuous religious symbols is prohibited” in the case of events and competitions organised by sports federations. In fact, the Senate clearly stated “the wearing of the veil in sport competitions” is prohibited because it can put the safety of athletes wearing it at risk. This is directly at odds with the French amendment that states that all citizens are free to practice their religion. The law says “no one may be disturbed on account of his opinions, even religious ones, as long as the manifestation of such opinions does not interfere with the established Law and Order. The free communication of ideas and of opinions is one of the most precious rights of man. Any citizen may therefore speak, write and publish freely, except what is tantamount to the abuse of this liberty in the cases determined by Law.” 

The amendment proposed had 160 votes in favor while 143 against it. However, the amendment is not finalised and they will be meeting again to find a compromise on text, which means it can be erased. This isn’t the first law aimed to constrict Muslims. Another law was passed a year ago by President Emmanuel Macron which strengthened government oversight of mosques in order to counter the influence of the Islamist movement. In fact, the French soccer federation already bans women from wearing hijab in official matches and competitions organised by them. To tackle this blatant Islamophobia, a football group by the name of Les Hijabeuses that comprises Muslim women that wear hijab have been actively campaigning against the ban. 

This is another form of oppression dressed like a favour. The definition of oppression is “a situation in which people are governed in an unfair and cruel way and prevented from having opportunities and freedom,” so banning women from wearing hijab directly influences the freedom of expression that they can have. Women have been wearing headscarves for centuries, so they know how to carry themselves with it without the need of the senate trying to save them. 

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

Yemen: The humanitarian crisis facing the poorest Arab country after a 7-year war

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Ibrahem Qasim, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

The violence in Yemen is escalating after the Yemeni Houthi group sent deadly drone attacks to the UAE on Monday that killed three people and injured six more. The war that started with Saudi Arabia is now seven years old and there is no chance of it stopping.

The Yemen Houthi took responsibility for the attack in the United Arab Emirates’ capital that happened in an oil site near the airport. This wasn’t the first attack by them as another explosion happened a few days ago and left no damage. This attack came after the Yemen Houthis threatened the UAE government after losing Shabwa, a key area in their scheme to control the country. They couldn’t take control of the area due to Saudi and UAE troops that pushed their advances back. The Saudi Arabian government also claimed that it received three explosions, without proper proof. According to a report the reason for this is “the role of the United Arab Emirates as Saudi Arabia’s main ally in the war in Yemen – in the destruction of the country and the killing of innocent civilians – is not hidden from anyone,” moreover “it is quite clear that in every Saudi crime against humanity in Yemen, there are traces of the UAE. For the past three years, however, Abu Dhabi has tried to deceitfully distance itself from the consequences of this devastating war.”  

As a result, there was a Saudi-led coalition airstrike in the capital of Yemen, Sana’a which killed 20 people in total. The coalition plane struck the house of a high-ranking military Houthi official, killing him and his family. This war has harmed innocent people the most as the UN believes that the country is already at the brink of a complete humanitarian disaster if these conditions continue. By the end of 2021, the Yemen conflict led to more than 377,000 deaths, both directly and through indirect reasons like lack of food and healthcare. Most of these deaths are made up of young children who die due to malnutrition. Right now, around 15.6 million people have been forced into extreme poverty as well.

The biggest victims of wars are always vulnerable people who get trapped between the conflicts of the country. Although the road to peace will not be easy, it is essential because the question remains how many more innocent people need to die to bring a stop to this war? Also, who is this war benefiting if the population of the country is living in extreme poverty and distress? 

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

Tonga in dire need of drinking water and food

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After the underwater explosion of a volcano near Tonga on Saturday ash, steam, and gas covered the region. This has led to a shortage of food and fresh drinking water and now the country is in dire need of help. 

The volcano has erupted three times in four days, causing major damage to Pacific island nations. The eruption was so powerful that it could be heard as far as New Zealand and Fiji Island. This eruption is said to be the biggest one recorded in over 30 years. Tonga is the nearest Island to the explosion, leaving it to face the aftermath firsthand. After the explosion, the Pacific Kingdom experienced a tsunami that ruined the coastal houses and businesses. If that wasn’t worse enough, their internet, power lines, and other forms of communication with the outside world have also been cut off. The chief executive officer at Save the Children Fiji, Shairana Ali explained how the situation in Tonga is dire by stating “there is an immediate need for food and water because there is severe ash fall and as a result of that water sources have been contaminated in most of the islands that have been affected,” adding “we are concerned about air quality as well. And our concern is for children who would obviously have had mental trauma because of this once-in-a-lifetime event.”

New Zealand and Australia are setting up efforts to help the ash-covered Island. To aid the situation of Tonga, a Royal New Zealand Air Force Orion aircraft has left for aerial inspection. However, till Sunday it had to stay on stand-by due to the terrible air conditions. Moreover, according to the New Zealand Prime Minister, Jacinda Ardern, the government has made an initial donation of $ 500,000 NZ to provide assistance to the country. The United Nations have also expressed their readiness to help the Island recover from the damage caused by this volcanic eruption. Since the main undersea communication has been impacted, there is still no proper report of injuries and deaths in the area. Moreover, the threat of a tsunami in other Pacific nations has now passed. The only precaution is that the coastal areas still need to stay alert for high waves. Hopefully, proper aid is provided to the people stuck in Tonga and those still not able to communicate with the outside world. 

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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Environment

Tonga volcano eruption sends warning of tsunami to Japan and USA

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After the volcanic eruption of the Hunga Tonga-Hunga Ha’apai volcano, the shores of Japan and the USA are at risk of a tsunami. The underwater volcano erupted on Saturday 15th January 2022 and is causing ripples across the South Pacific coast.

The volcano erupted about 30 kilometers southeast of Tonga’s Fonuafo’ou Island twice, first on Friday and then later on Saturday. The volcano resulted in ash, gas, and steam reaching about 20 kilometers into the air. It also caused huge waves of more than a metre to crash into Tonga while many parts of the country are covered in ash. This also led to the blackout of power lines, phone lines, and also the internet. Not only that, there have been a lot of traffic jams in the country as people are fleeing the low-lying areas, leading to more disorder. 

Along with Japan and the USA, many South Pacific islands are experiencing large waves crashing into coastal homes. This has led Japan and the USA to advise people near the coast to move away as precautionary actions. Japan has issued a warning of waves reaching about three meters, to hit the southern part of the country, specifically the Amami islands where a 1.2m tsunami is already recorded. The high waves have not caused any harm yet, however, the Japan Meteorological Agency urged people to not go near the sea until all tsunami warnings are lifted.  In the briefing, the Japan Meteorological Agency official also stated “we do not know yet whether these (waves) are actually tsunami.” Moreover, the sound of the volcano could be heard in the Fiji Island of Japan as “loud thunder sounds” for around eight minutes. This island is 800km away from the source of the eruption leading to the Fiji government issuing a tsunami advisory and opening evacuation centers.

The volcano was heard in New Zealand as well which is pretty unusual since New Zealand is more than 2000 kilometers away. The GNS Science volcanologist Geoff Kilgour said “people hearing these sorts of sounds from so far away is very rarely recorded, it is only a few times in history,” adding that this explosion was “by far the most violent eruption that we have seen in some time.” Prof Shane Cronin, a volcanologist at the University of Auckland also shared her opinion, “this is a pretty big event – it’s one of the more significant eruptions of the last decade at least,” she said. This is of course a very big and rare event that will be remembered for many years to come. 

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

A ‘historic victory’ of Germany’s exemplary verdict on Anwar Raslan

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After a decade long wait, the silenced voices of the suppressed Syrian detainees who were assaulted, tortured and murdered in the Al-Khatib detention centre were given a voice on Thursday. The screams that were forcefully confined inside the dark walls of the 251 Branch of GSD, for years, were finally heard as the German court of the city of Koblenz sentenced Anwar Raslan to lifelong imprisonment. Anwar Raslan acted as an accomplice in the war crimes carried out under the regime of Syrian President Bashar al Assad. He was a prominent colonel overlooking the detention centre in Damascus, and the charges against him included the death of more than 20 murders and about 4000 allegations of abuse and torture. 

Although Syria had already been under the watch of the member states of the UN since 2011 for its restrictions on freedom of speech and forceful suppression over the people, the refugees coming from Syria to Germany seeking asylum were the ones who brought the world’s attention to the horrors being inflicted on them. Raslan himself was one of the refugees who sought asylum in Germany in 2012. But in 2019, Germany charged him, under international jurisdiction, and after considering the statements of 80 witnesses, a verdict of life imprisonment was given to him for his horrendous acts.

This was the second case of its kind. The first trial was of Eyad al-Gharib who was sentenced to four and a half years in prison for the crimes he committed in Syria under the supervision of Anwar Raslan. These trials were carried out under the code of crimes adopted by Germany in 2020, which according to United Nations’ Human Rights chief: “no matter where you are or how senior you may be, if you perpetrate torture or other serious human rights violations, you will be held accountable sooner or later, at home or abroad”

The verdict was welcomed greatly by the Syrian refugees who were able to escape the torture. Wassim Mukdad, who was one of the subjects of the abuse in the detention centre, while talking to BBC  over the verdict by exclaimed: “this is the first step in a very long way towards justice”

The Deputy Director for Amnesty International’s Middle East, Lynn Maalouf, while commenting on the decision said that the trial was only possible because of those “who dared to share their stories”. Appreciating the role of Germany, Lynn Maalouf called on the other countries to “follow Germany’s role.”

Although these kinds of trials have set an example for the world to attain justice, the developed countries and the countries in power, also need to devise plans to ensure the establishment of peace and ways to deal with the matters of Human rights in a timely manner. 

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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