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Board Diversity? A Surprising Share of Directors Say Shareholders Are Too Obsessed With It

Claire Zillman
By
Claire Zillman
Claire Zillman
Editor, Leadership
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Claire Zillman
By
Claire Zillman
Claire Zillman
Editor, Leadership
Down Arrow Button Icon
October 19, 2018, 9:25 AM ET

A new PwC survey of corporate directors out this week provides some head-scratching results. First, the good news: some 94% of directors agree that board diversity brings unique perspectives to the boardroom, and 84% say it enhances board performance. In that same vein, 91% report that their boards have taken some steps to up diversity—an increase of four points since last year.

Now for the puzzling data: Even as the overwhelming majority of directors recognize the benefits of board diversity, more than half—some 52%—say the push toward more diversity in the boardroom is driven by political correctness, and nearly as many—48%—say shareholders are too preoccupied with the topic.

It’s worth looking at how those two results break down along gender lines. Among male directors, 58% say the diversity push is motivated by PC culture, compared to 26% of female directors. Fifty-four percent of men on boards say shareholders care too much about the subject, versus 20% of women.

Paula Loop, leader of PwC’s U.S. Governance Insights Center, says this feedback indicates directors’ “fatigue about this topic even though investors and shareholders don’t appear ready to move on.”

Regardless of directors’ true feelings about the diversity push, the effort is paying off to some degree. Twenty-two percent of board seats in the S&P 500 are held by female directors, up from 16% 10 years ago. Of S&P 500 boards, 99% have at least one woman director, and 80% have two or more women directors. Surely, there is still a long way to go, but the needle is undoubtably moving in the right direction.

Even if they roll their eyes at investors’ concerns about diversity—BlackRock, Vanguard, State Street Advisors, the New York City Pension Funds, CalPERS, and CalSTRS have all taken a stand on the issue—directors cannot ignore such demands. As PwC said on the first page if its report: institutional investors now own 70% of U.S. public companies and they’ve become more and more vocal about what they want from boards.

A version of this story first appeared in The Broadsheet, Fortune’s daily newsletter about the world’s most powerful women. Subscribe here.

About the Author
Claire Zillman
By Claire ZillmanEditor, Leadership
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Claire Zillman is a senior editor at Fortune, overseeing leadership stories. 

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