by Barbara Frankel
Six federal agencies recently released joint standards to assess diversity efforts of the financial institutions they represent. Unfortunately, the standards have no means of accountability — they are entirely voluntary and require only self-assessment.
The standards came from the Offices of Minority and Women Inclusion (OMWIs), established in eight financial agencies and 12 Federal Reserve banks. The Dodd-Frank financial-reform law, signed into law by President Obama in 2010, requires that the OMWi assess “the diversity policies and practices of entities” regulated by the agencies. The six agencies releasing these standards are the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Securities and Exchange Commission, National Credit Union Administration and the Consumer Financial Protection Bureau.
“Congress gave the OMWIs a chance to help this critical sector of our economy truly reflect America, but what came out today sends the message that either the OMWis or their bosses don’t care,” said Sasha Werblin, Economic Equity Director of the Greenlining Institute. “Imagine if you’re back in school and your teacher tells you that you can decide whether or not to take a final exam, write it yourself, grade it yourself, and any bad results won’t appear on your transcript. That’s what they’ve done. It’s just staggering.”
Added Securities and Exchange Commissioner Luis A. Aguilar. “In the end, the agencies have chosen to do what is convenient for the companies, rather than the right thing for the long-term benefit of our country.” He noted that white men are now 31% of the U.S. workforce but 64% of executive and senior positions in the financial industry.
Here are the most significant standards, what the Greenlining Institute and other critics propose, and our assessment based on 15 years of examining DiversityInc Top 50 Companies for Diversity data on effective diversity-management practices.
• Everything is voluntary. The standards let these organizations hold self-assessments on employee and supplier diversity and voluntarily submit them. Greenlining notes that “self-assessments open the door for institutions to offer spin rather than data.” Our view — Government agencies should be accountable for their data and public information on the diversity of their workforce and management – and how they got there – should be transparent.
• Language is unclear and there are no deadlines. Greenlining, Commissioner Aguilar and other critics want the standards to specify procedures to collect data and provide a timeline. This would include regular periods when human-capital and supplier-diversity information is reported. Our view– We agree. Without deadlines, there is no way to accurately receive information in a timely way. And having regular periods of reporting allows for year-to-year comparatives as well as benchmarking with other organizations.
• Establish an advisory committee knowledgeable in diversity issues. This committee is to include representatives from the nonprofit, private and academic sectors. Our view – It is important to have the right representatives on this committee, people whose organizations actually have concrete track records in reaching D&I goals, such as Top 50 companies. It is also important to have diverse representation (including LGBT people and people with disabilities).
• Increase public access to data. This is very important – and not happening now. Without full transparency, the public cannot know whether these regulated entities are really trying to be diverse or just giving lip-service to a toothless law.
Greenlining’s Werblin said that effective models to promote diversity in regulated businesses exist, such as the Public Utilities Commission and Department of Insurance in California. They have clear reporting standards on supplier diversity.