A Call to Lead on Racial and Ethnic Diversity

Senior Advisor

Diversity, equity and inclusion. They’re important aspirations for all of us. But in the daily grind of Corporate America, there is also another side to these issues that often gets lost: their positive impact on corporate performance.

At State Street Global Advisors, we embrace diversity, equity and inclusion as essential elements of our culture – and our success. Time and again, we have seen evidence that diversity of thought — of ideas and experiences — is critical to the performance of the companies in which we invest, as well as the performance of our own organization. And yet, for all that evidence, we all know that true equity and inclusion in the workplace are often elusive.

Last year, however, marked a turning point in how our society addressed racial injustice and inequity. The death of George Floyd and the health and economic inequities amplified by the COVID-19 pandemic underscored the need for deep, structural changes – and the urgent need for Corporate America to take the lead in offering solutions.

Two years ago, we started disclosing information — known as “EEO-1” data — which details the gender, racial and ethnic make-up of our employees in the US. Subsequently, in August 2020, we took the additional step of informing our portfolio companies that we would be engaging with them directly on their approach to race and ethnicity. Earlier this year, we formally began calling on our portfolio companies to publicly disclose their own EEO-1 data. Even still, it was clear that more needed to be done.

Today, I am proud that 14 financial institutions, including many leading asset managers such as State Street Global Advisors, have agreed to disclose their own EEO-1 racial diversity data as part of the Corporate Call to Action – a coalition for equity and opportunity organized by the Connecticut State Treasurer, Shawn Wooden and Darren Walker, president of the Ford Foundation. In addition, our coalition is also calling on other peers in the asset management industry to disclose their data and for all of us to engage on this important subject with companies in our respective investment portfolios.

I believe our industry has a special responsibility to address these issues, leveraging our role as stewards who oversee trillions of dollars invested in public companies for the purpose of funding people’s retirement, college savings and other critical savings plans. As the stakes for our economy and society have grown, our industry is increasingly being called upon to offer more than simply our knowledge of capital markets. We are being asked to demonstrate leadership by harnessing our resources and access to information to generate outcomes that are more likely lead to value creation over the long term. And, since our employees are obviously one of our most critical resources, we believe there is a clear link between diversity, equity and inclusion, and value creation.

Indeed, this was the impetus for our Fearless Girl campaign to increase gender equity on boards four years ago – and in many ways behind the Corporate Call to Action itself. In fact, in my conversations with Shawn and Darren, I suggested that our coalition consider EEO-1 disclosure by its members as one of our group’s first actions. Since only 6% of Russell 1000 companies share detailed data publicly on their employees’ gender and ethnic identities — and our own industry faces persistent challenges with the recruitment, retention and promotion of diverse talent — disclosure is a natural and important first step.

Disclosing EEO-1 data — the standard vehicle for this disclosure in the United States — and asking our portfolio companies to do the same will provide a clearer view of the diversity of workforces. This data will play a critical role in informing corporate diversity strategies, establishing measurable performance metrics, and ultimately leading to plans to address inequities. That, in turn, will ensure more accountability to customers, shareholders and the public writ large while driving greater performance over the long term. As importantly, our collective action also sends a clear message to companies across America:

That real accountability on this issue starts with each of us.

None of us has all the answers when it comes to racial and ethnic equity. While some of us are further along in addressing issues of diversity than others, every single one of our companies has a long way to go to see the progress we need – one reason State Street has instituted our “10 Actions” strategy to eliminate racial inequity in our organization. By taking this concrete first step within our respective organizations — and sharing that information with the public—we can set a powerful example that advancing racial and ethnic diversity is a priority for our companies, our industry and our society.