It will come as no surprise to many that the ‘Western’ business world is disproportionately represented by white men in executive or senior positions, vastly and eye-wateringly so.
For example, as of early 2021, it was still the case that almost 90% of the Fortune 500 CEOs were white males, despite that demographic only making up 35% of the US population, as shown by research from Richard L Zweigenhaft, Dana professor of psychology at Guilford College in North Carolina.
These figures have only become slightly less dire over the past 20 years, with white men holding 96.4% of the Fortune 500 CEO positions in 2000. While there has been an improvement, Zweigenhaft points out that most of the seats lost by these males were gained by white women, as the chart below shows. As a result, in 2021, just 1% of the Fortune 500 CEOs (male, female or non-binary) were African-Americans, 3.4% were Hispanic and 2.4% were East or South Asian – bearing in mind that African-Americans account for 13.4% of the US population, Hispanics 18.5% and Asians 5.9%.
Although Hispanics are the least represented among Fortune 500 CEOs, relative to their share of the US population, African-American CEOs hold their positions for the least amount of time among the elite 500, as per the below chart. While the average tenure for Fortune 500 CEOs is 6.9 years, for African-Americans it is 4.8.
Tenure aside, the conclusion of Zweigenhaft's study of corporate America's highest echelons is loud, clear and all too familiar: Black, Asian and minority ethnic (BAME) communities are the losers. The latest figures from GlobalData corroborate this, showing that, over the past four years, BAME representation among senior employees in North America's top 500 companies averaged just 11% (see below).
A lack of information (and diversity) in corporate Europe
While there is no upside to these stark figures, North American companies do at least report the ethnic breakdown of their senior (and general) staff to a far higher degree than European companies. In 2020, almost half of North America's top 500 businesses made public such figures on diversity and inclusion, up from 27% in 2017, meaning the practice almost doubled in just three years, as per the chart below from GlobalData.
This should give pause to the shameful performance of European companies, just 11% of which reported the ethnicity of their senior employees (up from a measly 1.8% in 2017). So, although the chart above shows that BAME communities accounted for between 8% and 13% of Europe's elite business staff, this is based on immensely scant reporting. For example, 2017's figure of 13.93% was derived from data given by a grand total of just three companies.
"There is very little effort in European companies around diversity and inclusion, and if there is then they are super early in their journey," an anonymous source in the industry tells Investment Monitor. "Part of the issue is the European (fallacious) perception that racism is more of an American problem." However, the source elaborates that the UK and Ireland are somewhat the exceptions because, firstly, they have greater diversity in their workforce and, secondly, these countries have equality acts and statutory reporting, with the gender pay gap being the best example and disability-related reasonable adjustments being another.
"I work in a major human rights charity and [even here] our European sections are so behind in diversity and inclusion. One [Nordic country] is starting to think about its diversity and inclusion [policy] and have asked me to help them think it through," they add.
Where the European private sector has fallen short on such reporting, non-profit organisations have risen. For example, UK charity Operation Black Vote partnered with the Guardian newspaper and others to illustrate ethnic diversity (or the lack thereof) among the UK's halls of political and corporate power. Their research shows that, of the UK's 1,160 most powerful people in 2021, almost 94% are white-British individuals, despite that demographic making up about 80% of the population (see below chart). More specifically, just 1.5% were black, a community that represents 3.3% of the UK populace.
Ethnic diversity and inclusion among North America's corporate elite has a long, long way to go, and the same is true for corporate Europe, based on the scarce data made available by the continent's leading companies. Europe's dismal display of transparency is particularly shameful, especially in light of the EU's highfalutin rhetoric surrounding all things connected with ESG and the UN's Sustainable Development Goals. With GlobalData's 2021 data still being gathered, it can only be hoped that companies on both sides of the Atlantic have made immediate and substantive improvements to issues that both reflect and reinforce vast and ongoing structural racism across 'the West'.
To read more of Investment Monitor's coverage to mark Black History Month in the US, visit this article questioning whether investors care about racial equality, and this analysis of what socio-economic statistics reveal about racial divides in the US.