New York state is joining in on the evolving commitment to achieve and sustain more diverse, equitable, and inclusive (DEI) workforces, as a recent letter issued by New York Superintendent of Financial Services, Linda. A Lacelwell finds.
The letter, addressed to New York State banking institutions, emphasizes the importance of diversity, and perspective when making important business decisions. The growing demand for organizations to promote DEI efforts and disclose progress with investors, governments, and other key stakeholders further underscores the importance.
To further drive organizations’ DEI initiatives as a business priority, the State’s Department of Financial Services “expects Regulated Banking Institutions and Regulated Non-Depository Financial Institutions to make the diversity of their leadership a business priority and integrate it into their corporate governance.”
As such, beginning fall 2021, New York State’s Department of Financial Services (NYDFS) will begin collecting gender, race, and ethnicity board composition data from select financial banking organizations. Specifically, all regulated banking institutions with more than $100 million in assets, all regulated non-depository financial institutions with more than $100 million in gross revenue, and entities that engage in virtual currency will need to comply.
In facilitating the process for data collection, the NYDFS will issue surveys to collect gender, race, and ethnicity data to identify organizational board and management makeup. The data being collected will reflect organizational makeup as of December 31, 2019, and 2020, and will include “information about board tenure and key board and senior management roles,” the letter adds.
While the data snapshots the NYDFS is seeking are from previous years, once the data is disclosed, it will be beneficial for organizations to demonstrate the progress they’ve made in fostering a more diverse board. A great way for organizations to showcase this is through ongoing monthly monitoring of DEI goals and initiatives.
The NYDFS plans to make the aggregated data available to the public sometime in the first quarter of the 2022 tax year. The letter concludes by saying that moving forward it may collect and disclose “similar information in the future, including on a more granular basis, considering any other data collection and disclosure requirements that may be imposed on the banking and financial services industry.”
This final portion of the letter suggests that information pertaining to employee wage and compensation may be collected, as pay equity is a significant component of DEI. Organizations should seize the opportunity for getting ahead of this initiative by undergoing a proactive pay equity audit. Download our white paper Designing a Successful Pay Equity Policy for Your Organization to get started.
NYDFS’s announcement to collect diversity data from financial institutions aligns with the overarching theme of driving DEI initiatives and should not come as a surprise to organizations. The FDIC’s Office of Minority and Women Inclusion (OMWI) is already encouraging financial institutions to submit self-assessments of their DEI policies and practices.
The Securities and Exchange Commission (SEC) as well is making environmental, social, and governance (ESG) a focus. A key portion of ESG criteria is indeed DEI, as it falls under the social criteria. Through a risk alert, the SEC made it clear that organizations need to make good on their ESG claims.
President Biden too is focusing on pay equity and closing the gender pay gap in the workplace. The administration already expects financial institutions to share diversity and inclusion data with the public, in addition to tracking any efforts towards increasing DEI.
Bottom line — more DEI and ESG reporting requirements are coming for organizations, financial and otherwise. Best practices for disclosing this data include undergoing comprehensive monthly monitoring to fully understand your organization’s workforce makeup, where you’re excelling, and where improvements need to be made. If 2021 has been any indicator, disclosure requirements are not going away.
Download our white paper DEI in ESG Reporting to learn best practices for disclosing your goal progress.
To learn more about achieving pay equity, click here.
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