The following piece appears as a sidebar in the upcoming Quarter 3 2023 edition of Directors & Boards:
Joyce Cacho
Board Chairperson, Sistema.bio; Supervisory Board Director, World Benchmarking Alliance; CEO and President, Adinura Advisory Services Inc.
What effect could the Supreme Court's recent decision on affirmative action have on board and company DEI initiatives?
Joyce Cacho: Businesses that wait to be followers tend to be at the top of the “List of Laggards” of their industry. Companies that have gone through the process of aligning their mission, purpose, vision, company policy, strategy and operations have invested energy and time in asking tough questions. Companies that have not done that alignment work can hold up the ruling as confirmation of their status quo, a “You see, diversity really doesn’t matter,” and then they can go back to their playbook as they had it up to the (not so shocking) U.S. Supreme Court ruling, which effectively eliminated the use of affirmative action in college admissions. So, if company boards are looking for an excuse to not focus on what good governance can do to provide insurance for the longevity of your company across generations and across marketplaces, they’ve been handed one. However, if a company wants to truly succeed as a business, then they will follow what is known to be true: that diversity, equity, inclusion and belonging are game-changers for whether or not you're around. Knowing that, board directors should stay focused on raising the company's “alignment” bar.
And I’m not talking about the long term when I mention companies sticking around. Experience shows that a company can lose value as quickly as over a weekend. If a company is about making operations their growth engine, be that in domestic and/or international markets, then the work to align diversity initiatives to business operations falls in the must-do column. Data from the years since March 2020 makes it clear that treating diverse candidates as a “nice-to-have” means that you’re embedding a risk into operationalizing business strategy. If the company's boardroom is not diverse today and this ruling is an excuse to maintain the boardroom status quo, then this may be indicative of complicity in putting the company's business at risk.
As board directors, we are there to be additive to companies around systemic risk, and we know through clarity of data that systemic risk today includes diversity.