Since its creation in 2019, the U.S. House Committee on Financial Services’ Subcommittee on Diversity and Inclusion has analyzed the state of diversity and inclusion in the financial services sector in an effort to achieve economic inclusion for all.
During a Subcommittee hearing titled “Unfinished Business: A Review of Progress Made and a Plan to Achieve Full Economic Inclusion for Every American,” DiversityInc CEO Carolynn L. Johnson testified as a witness to discuss the importance of accountability and transparency as well as her observations on strides that have been made to diversify the financial services sector and where more needs to be done. This was Johnson’s second time testifying before the Subcommittee.
Johnson started out by sharing information about DiversityInc’s annual Top 50 survey, which is now open. The survey, which focuses on workplace fairness, is open to employers with 750 or more employees and “offers a scientific approach” for those employers to “receive comparative data about the effectiveness of their policies, practices and procedures and leadership accountability, supplier diversity, human capital metrics, talent development and philanthropy,” Johnson said, adding that 1,800 employers participated in the survey and 130 ranked on one of our lists this year. “I have no doubt that the increase in workforce data transparency that we have seen at DiversityInc is due to the tireless efforts of this committee.”
Twenty-four percent of survey participants in 2022 self-identified as finance and insurance institutions by sharing their North American Industry Classification Code. One of those organizations was State Street Corporation, which ranked on the Top 50 Companies for Diversity list for the first time at No. 44.
“[State Street] CEO Ronald P. O’Hanley is lauded for saying, ‘we believe that diverse and inclusive workplaces are critical to achieving superior execution.’ Those words have merit as State Street also ranked on the DiversityInc Top Companies for Board of Directors, Executive Diversity Councils and Top Companies for Talent Acquisition for Women of Color,” Johnson said.
Johnson shared a quote from Jose Minaya, CEO of leading global asset firm Nuveen, a TIAA Company (ranked No. 8 on the 2022 Top 50 list), which was shared at our annual Top 50 event in May.
“The SEC’s approval of NASDAQ’s request to require board diversity disclosures for companies listed on its stock exchange will fuel transparency and accountability regarding practices and reporting on DEI, and this is a start but there is more work to be done to bring about irreversible, sustainable change.”
Changes in the Financial Sector
According to data from the U.S. Census Bureau, employment in the financial management industry is expected to grow much faster than the labor market as a whole by 2029, and with increased demand for those services comes an increase in demand for skilled professionals who can plan, direct and coordinate investments.
The research also shows that the majority of people in the U.S. will be people of color by 2045, and while that may be true, “some things seem to remain the same,” Johnson said.
“Research found that white men managed a stunning 98.7% in the U.S. investment management sector in 2019. That’s hedge funds, mutual funds, real estate funds and private equity funds.”
Johnson added that there’s a “close relationship between workplace fairness and business success.”
“We must continue to hold each other accountable, and this body must continue the work of requesting data that proves we are making progress and not just saying we are,” Johnson said. “We must maintain momentum and reinforce what fair treatment is and what decency and values must be.
“We must not forget that while some have created generational wealth through tools like racism, sexism and classism, fairness and access will always be more profitable.”
Watch the full hearing to hear more from Johnson and others who testified as witnesses before the Subcommittee on Diversity and Inclusion.