More than half the population is women, but far fewer are at the top in corporate America. Looking at the Fortune 500, only 24 CEOs are women. Similarly, 4 in 10 people in the US identify as an ethnic minority, yet less than 15% of Fortune 500 board seats are held by these groups. Boardrooms don’t reflect the real world, and that’s an issue.
We have a long way to go, and the shortage of diverse teams means companies might be missing out on returns. Companies in the top 25% for racial and ethnic diversity are 35% more likely to outperform their peers, while companies in the top 25% for gender diversity are 15% more likely to outperform other companies in their industry.
By simply making it a priority to consider diversity and acting on those initiatives drives profits higher. Of a similar study by the Peterson Institute, its director Marcus Noland said, “The evidence on women in the C-suite is robust: no matter how we torture the data we get the same result: women in the C-suite are associated with higher profitability.”
"That’s right: Just having a woman in the room makes a company more money."
What does it mean to have diverse company leadership?
Diverse leadership means appointing people to leadership roles who are representative of the population in general.
From a brand perspective, you can't craft a narrative for your customers if you only value select points of view. Commitment to diversity and inclusion leadership means more than just a number, a department, or even an objective. Diversity and inclusion efforts must be in the very marrow of an organization so that its story can be meaningful and authentic.
Finding diverse companies to invest in
When culling the tens of thousands of companies we hoped to comprise Swell’s Impact 400, our first measure of inclusion was diversity. Does a company have at least one (just one!) woman or minority on its board or executive team? From there we went on to narrow the list down even further based on our other requirements, but that had to be our starting point – because so few companies are able to meet that standard.
Of each company we hold in the new Impact 400 portfolio, we’re proud to say that they’re taking charge and making change. Each has diversity and inclusion initiatives that they’re actually acting on, each derives its revenue from a business stream that directly links back to at least one of the United Nations Sustainable Development Goals, and they represent a wide range of sectors (from Automobiles to Utilities) making this a more diversified product unlike our thematic portfolios, which are more concentrated with respect to impact and sector focus.
