Illinois Treasurer Michael W. Frerichs is leading an investor initiative asking that all companies within the Russell 3000 Index disclose the makeup of their boards of directors – inclusive of gender, race and ethnicity – given the correlation between board diversity and long-term performance.
Launched in October 2020, the initiative includes 26 investor organizations representing over $3 trillion in assets under management and advisement.
Treasurer Frerichs has been working to increase corporate board diversity since 2016, utilizing an array of strategies – including direct shareholder-company engagement, proxy voting, and public advocacy – to counter the unacceptably slow pace of change and ensure diversity is a corporate governance priority. The push for increased and standardized disclosure, at the center of this initiative, has been a focus of the Illinois Treasurer since 2019.
- Illinois State Treasurer Michael Frerichs (Chair)
- Connecticut State Treasurer Shawn Wooden (Co-Chair)
- Ariel Investments
- Boston Trust Walden
- Chicago City Treasurer
- Delaware State Treasurer
- Illinois State Board of Investment
- Impax Asset Management
- JLens Investor Network
- JUST Capital
- Legal & General Investment Management America
- Marquette Associates
- Meketa Investment Group
- Minnesota State Board of Investment
- New York City Comptroller
- Oregon State Treasurer
- Seattle City Employees’ Retirement System
- Segal Marco Advisors
- SEIU Master Trust
- SOC Investment Group
- Trillium Asset Management
- UAW Retiree Medical Benefits Trust
- Vermont Pension Investment Commission
- Vermont State Treasurer
- Wespath Benefits and Investments
- Wisconsin State Treasurer
About the Initiative
Members of the initiative share a concern about the relatively low number of women and persons of color on corporate boards, as well as the paucity of data on racial/ethnic diversity at the board level. Members also share the goal that leading American companies voluntarily disclose the racial/ethnic composition of their boards of directors given the correlation between diversity and long-term outperformance.1
Many institutional investors, including the Illinois Treasurer, have advocated for gender diversity on corporate boards through proxy voting policies and through direct shareholder-company engagement. These actions, now broadly adopted by institutional investors across the world, have helped generate an increase in gender diversity on corporate boards. The lack of data on racial/ethnic composition, however, makes it difficult to apply the same tools and creates unnecessary barriers to investment analysis and academic study.
The Black Lives Matter movement and the widespread outrage sparked by the murder of George Floyd have prompted a national conversation on issues of racial equity and inclusion. Many companies have issued statements in support of racial justice, and in some cases announced responsive efforts at their operations. This initiative urges companies to harness this national movement and the momentum on gender diversity to consider publicly reporting the racial/ethnic and gender composition of the Board of Directors in their annual proxy statement.
In October 2020, Treasurer Frerichs launched the Russell 3000 Board Diversity Disclosure Initiative, which includes 26 investor organizations representing more than $3 trillion in assets under management and advisement. Each year, the investor coalition sends a letter to Russell 3000 companies, asking each to report the racial, ethnic and gender composition of the board of directors in their annual proxy statement. In 2022, Frerichs’ annual letter to Russell 3000 companies was customized based on each company’s level of disclosure, grouped into three categories:
- 386 companies (13 percent) were commended for providing exemplary disclosure, which includes reporting the race, ethnicity and gender of individual board directors, often via a “Board Matrix;”
- 1,847 companies (63 percent) were recognized for providing partial disclosure, which includes reporting the race, ethnicity and gender of board directors in aggregate or for only certain members, and as such, are encouraged to enhance their reporting; and
- 702 firms (24 percent) were urged to begin reporting as they neglect to disclose the race, ethnicity and gender of board directors in public filings.
Using 2022 data from Institutional Shareholder Services (ISS), Frerichs identified more than 2,200 companies in the Russell 3000 that now disclose the board’s racial, ethnic and gender diversity in aggregate or by individual director, up from 292 companies in 2020.
This initiative aligns with the work of The Thirty Percent Coalition, a national organization that, in addition to advocating for board diversity, has called on companies to publicly disclose their board composition, inclusive of gender, race and ethnicity. This initiative builds on the Coalition’s work by expanding this call to action to Russell 3000 companies. It also builds on the momentum of the Midwest Investors Diversity Initiative and the Northeast Investors Diversity Initiative.
Members of the initiative either have or are examining policies to vote against nominating committees with no reported racial/ethnic diversity in their proxy statements and expanding more direct shareholder engagement. We find voluntary corporate reporting in the proxy statement the most reliable data source.
Should you have any questions or inquiries, please contact the Office of the Illinois State Treasurer at or MWVD@illinoistreasurer.gov.
 “Diversity Wins,” McKinsey & Company, 2020, available at: www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Diversity%20and%20Inclusion/Diversity%20wins%20How%20inclusion%20matters/Diversity-wins-How-inclusion-matters-vF.pdf; “Why Diversity Matters,” McKinsey & Company, 2015, available at: https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters#; David Rock and Heidi Grant, “Why Diverse Teams are Smarter,” Harvard Business Review, Nov. 4, 2016, available at: https://hbr.org/2016/11/why-diverse-teams-are-smarter.