Communities of color have historically been and continue to be excluded from powerful positions in government, corporations and financial institutions. For three decades, The Greenlining Institute has advocated for racial inclusion in spaces of power, including corporate boards of directors. These institutions broker power and negotiate racial equity, ultimately deciding who gets access to capital, what resources a child inherits, who can own a home and who can start a business. The COVID-19 pandemic has compounded inequities in communities of color:
Black and Brown communities have disproportionately suffered, with deaths at a rate at least two times higher than other racial groups. Forty-one percent of Black business owners are experiencing significant decreases in revenue, and job losses are higher for all communities of color.1 The compounding inequities exacerbated by COVID-19 remind us that representation in decision-making positions matters, as we again examine the executive boards of California’s top financial institutions.
Why Diverse Bank Boards Matter:
Increased diversity and inclusion in the executive boards of financial institutions is not enough to make financial services and access to capital available to women and people of color. However, boards set the culture at banks. Greenlining’s Diversity, Equity and Inclusion Framework8 shows that when companies intentionally create diverse, equitable and inclusive work environments, they help to correct income disparities that then inform broader economic conditions in marginalized communities. For financial institutions especially, leadership and senior management should reflect the communities they serve in order to create inclusive decision-making bodies and promote a system of shared prosperity that ensures accessible capital and financial services.
Banks doing business in California should reflect a state population of more than 64% people of color. In order to fight redlining and promote economic development in communities of color, boards need to reflect the diversity of the population they serve and consider equity when recruiting board members.
Additionally, research shows that companies in the top quartile for ethnic diversity are 30% more likely to have financial returns above their industry’s national average.9 And companies with greater gender diversity are 15% more likely to achieve the same. Diverse businesses outperform homogenous companies, keep top talent, maintain employee satisfaction, improve customer relationships, and create a cycle of increasing returns.
Bank Boards are Still Not Diverse
While California's top banks have made some strides in increasing board diversity over the years, progress largely stalled this year. There still remains a pressing need to include more people of color, especially women of color. In most cases where we were able to compare 2020 figures with 2019, diversity remained the same or decreased.
- Racial Diversity: East West Bank ranked highest, with people of color making up 63% of the board (five of eight board members).
- Gender Diversity: Citibank ranked highest, with women making up 44% of the board (seven of 16 board members).
- Women of Color: East West Bank ranked highest, with women of color making up 25% of their board (two of 8 board members).