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November 04, 2008
Corporate Glass Ceiling for Women and Minorities is yet to be Shattered
    by Robert Kropp

Reports on diversity in the workplace find women and minorities in executive positions remain in short supply, and corporations resistant to sharing data on diversity practices.

In November, 1995, the now-defunct Federal Glass Ceiling Commission issued a report entitled "A Solid Investment: Making Full Use of the Nation’s Human Capital", in which it found that "Minorities and women are still consistently underrepresented and under-utilized at the highest levels of corporate America." Among the Fortune 2000 companies, "only 5% of senior managers are women, and almost all of them are white; African American men with professional degrees earn 21% less than their white counterparts holding the same degrees in the same job categories."

In 2002, the US Equal Employment Opportunity Commission examined Employer Information Report EEO-1 data and found that little had changed: "Women represent 48% of all EEO-1 employment, but represent only 36.4% of officials and managers," its report entitled "Glass Ceilings: The Status of Women as Officials and Managers in the Private Sector" concluded.

The EEO-1 Report is a government form requiring many employers to provide a count of their employees by job category and then by ethnicity, race, and gender.

Sadly, as 2008 comes to an end, recent reports have found that diversity in corporate boardrooms remains an unrealized goal. The Calvert Group , in its study of the 636 companies that comprise its Calvert Social Index, found that "83% of leading companies have at least one woman or minority on their boards, but only 38% have a woman or minority among their five highest paid executives."

The Calvert report, entitled "Examining the Cracks in the Ceiling: A Survey of Corporate Diversity Practices in the Calvert Social Index,", found that "Most companies performed at the bottom half of our Diversity Ratings Scale, and only 3% of the companies demonstrated excellent diversity performance." The ten indicators chosen by Calvert to measure diversity practices include EEO-1 disclosure, highest paid executives, board diversity, director selection criteria, and overall corporate commitment.

Considering that the companies in the Calvert Social Index are included on the basis of rigorously constructed benchmarks for measuring the performance of large, US-based sustainable and responsible companies, the report underscores the difficulty with which even corporations with good track records have in increasing transparency. spoke with Amy Augustine, Calvert's Manager of Diversity and International Labor Relations, about the findings of the report.

"Diversity in the workplace is not only a socially responsible imperative, but good business as well," Augustine said. "As the US working age population becomes increasingly dominated by women and minorities in coming years, the war for talent—for recruitment and retention in a global market—will grow. Companies that value diversity at every level of the organization perform better than those that do not, and they make better strategic and operational decisions."

Contending that "disclosure of detailed demographic data is critical to demonstrating how successfully women and minorities are advancing throughout a company’s ranks, and identifying potential weaknesses in diversity initiatives," the Calvert report found that "overall disclosure of internal and external diversity initiatives remains weak, with 48% of companies showing a complete lack of any public disclosure."

Augustine seconded the report's findings that EEO-1 disclosure "provides a comprehensive breakdown of a company’s workforce by race and gender across employment categories, enabling investors to get a snapshot of minority and female representation throughout a company’s ranks." She noted, "93% of companies have no EEO-1 disclosure. Of the 7% that disclose, a very few post their EEO-1 report on company web sites, while others will provide the information only to shareholders upon request."

A second report issued in September, entitled "A Renewed Call to Action: For greater disclosure of Equal Employment Opportunity (EEO) Information" and published by the Sustainable Investment Research Analyst Network (SIRAN) and RiskMetrics Group, further underscored the critical importance of greater EEO-1 disclosure.

Finding that "the disclosure rate among S&P 100 companies has diminished," the SIRAN report speculated that companies may be more reluctant to share the EEO-1 report because "employment disparities by race and gender tend to increase at higher management levels," a plausible explanation that is supported by data in the Calvert report.

Peter DeSimone of RiskMetrics, an author of the report, told, "Corporations tend to send a mixed message about valuing diversity. We certainly don't see much in the way of disclosure, when disclosure would help companies highlight where there might be problems. For instance, if community demographics and employee makeup fail to match, there could be a perception of discrimination."

One may suppose that companies are reluctant to disclose EEO-1 data because of the fear that doing so might expose them to employment discrimination lawsuits. But one company held up by both reports as a model of disclosure is Wal-Mart, which has been a target of lawsuits by women and minorities. "Wal-Mart goes against the grain, by deciding in favor of full disclosure after the filing of lawsuits against it," said Augustine.

In general, continued Augustine, "The largest companies in our index tended to do a better job in nine of the ten diversity indicators" included in the Calvert study. "The large companies tend to receive more press attention and shareholder pressure."

An especially disappointing finding of the SIRAN report is that shareholder activism has been on the decline since 2002, when 21 shareholder resolutions were filed requesting greater EEO disclosure. In 2007, proponents only filed two such proposals.

"Corporate executives might view this trend as an indication that corporate responsibility champions are losing interest in the issue and therefore do not make it a reporting priority," the report said.

DeSimone of RiskMetrics said, "If the SRI community wants greater EEO-1 disclosure, then they are going to have to go out and introduce shareholder resolutions on the subject. It's possible that with other hot-button issues predominating among SRI investors, corporate disclosure has decreased in importance for them."

Augustine of Calvert maintains a more optimistic view of the potential for shareholder activism in the future. "The purpose of our report was to bring these findings to light, and by doing so form a basis for advocacy," she said. "We have written letters to the nine companies in our survey which have provided no diversity information, and as investors we will continue to file shareholder resolutions that seek to improve corporate governance."


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