Good morning,
Between Bud Light’s failure to stand behind its promotion with trans influencer Dylan Mulvaney and Target’s removal of Pride merchandise in the face of violent threats, Pride marketing has taken a beating this year.
The high-profile corporate crises have been disheartening for Fabrice Houdart, who runs the New York–based Association of LGBTQ+ Corporate Directors, which advocates for board diversity and connects board candidates with sitting directors and corporate leaders. Houdart sees recent events as more proof that boards need to prioritize sexual-orientation and gender-identity inclusion within their own ranks to better navigate LGBTQ+ issues. However, he fears that many don’t believe in the necessity of this form of diversity.
When it comes to representation on boards, a lot of directors “understand the legitimacy of gender equality or the legitimacy of racial equality,” Houdart says. “But they see LGBT equality as a frivolous kind of topic.”
To be sure, gender and racial diversity are severely lacking on U.S. corporate boards even though many companies claim they’re committed to changing that. Women now make up just over one-third of S&P 500 board directors, though white women have made the most progress toward reaching parity when it comes to board seats at Fortune 500 companies. However, among all underrepresented groups, the LGBTQ+ community faces one of the largest inclusion gaps: In 2022, fewer than 1% of S&P 500 board members self-identified as LGBTQ+, according to Spencer Stuart. That’s compared to 7.2% of the general U.S. population, according to a recent Gallup survey.
Houdart is hoping potential future requirements that force companies to share the specifics of their boards’ demographics—such as the diversity disclosure rule that went into effect for Nasdaq-listed companies last year—will accelerate the rate at which companies add LGBTQ+ members to their boards. That process ought to be seen as an urgent concern, he adds, considering that an increasingly larger share of younger Americans identify as trans or nonbinary. And business will have to respond to that shift.
Anecdotally, he believes Nasdaq’s diversity push has already led to an uptick in LGBTQ+ appointments on major company boards. Data also show that more companies are at least reporting their progress with this issue: Spencer Stuart’s 2022 Board Diversity Snapshot found that 21% of S&P 500 boards included LGBTQ+ disclosures in their proxy statements, compared to only 6% in 2021.
Houdart recognizes that not all LGBTQ+ board members will make that part of their personal identities a focus of what they bring to the proverbial table. However, he senses that, compared to the powerful LGBTQ+ directors at today’s Fortune 500 companies who came up in an era when it was safer to stay closeted, today’s younger LGBTQ+ executives will feel more comfortable and motivated to embrace their role as community champions as they begin to land board seats.
Lila MacLellan
lila.maclellan@fortune.com
@lilamaclellan
Noted
“A simple policy of consistency about free speech within defined limits rather than appeals to the extremes of the culture wars is, frankly, better for everyone.”
—Lydia Polgreen, a New York Times columnist, explains how companies can simplify their policies amid political polarization in an essay about why “woke” capitalism is a paper tiger.
On the Agenda
👓 The board members of public companies ranked the climate-related challenges that were most likely to adversely impact their operations in the latest National Association of Corporate Directors Board Practices and Oversight survey. Energy management topped the list, followed by “unprecedented weather patterns.”
🎧 Europe’s Corporate Sustainability Reporting Directive, which lays out new reporting standards for companies listed in the E.U., will impact companies globally, say the thought leaders at Diligent, a maker of corporate governance software. In a recent episode of Diligent’s The Corporate Director’s Podcast, an ESG expert outlined what directors everywhere need to know.
📖 Looking to get smarter about A.I. technology? Bookmark this illustrated explainer about the architecture of A.I.’s large language models.
In Brief
- The Police and Fire Retirement System of the City of Detroit claimed a victory in its lawsuit alleging Tesla's corporate directors were grossly overpaid for three years beginning in 2017. Tesla's board said it would return over $735 million in stock and cash to investors to settle the case.
- OpenAI has been shedding board members: LinkedIn cofounder Reid Hoffman, and Neurolink director of operations Shivon Zilis, left earlier this year. Now Will Hurd has stepped down from the board following the launch of his presidential campaign.
- Disney’s board extended Bob Iger’s contract by two years last week. Since he regained the CEO role eight months ago, he has “strained to put out fire after fire,” the Wall Street Journal writes.
- Fortune Media CEO Alan Murray asked some Fortune 500 chief executives about their summer reading lists. Your beach-read cheat sheet—the corporate edition—is here.
- Climate change may move the 9-to-5 to 6-to-2, according to an Oxford study
The Long Read
Don’t let the fact that this New York Times Magazine feature centers on the actions of one obscure federal agency fool you: The article is anything but a snoozefest.
Journalist Alex W. Palmer looks at the Bureau of Industry and Security’s role in a U.S. attempt to “eradicate, root and branch, China’s entire ecosystem of advanced technology” by controlling exports of U.S. superconductor chips, explaining that the department hasn’t been so pivotal to the U.S. economy since the Cold War. He writes, “If the controls are successful, they could handicap China for a generation; if they fail, they may backfire spectacularly, hastening the very future the United States is trying desperately to avoid.”
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