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Taking ‘stock’ of DEI

Monday September 6, 2021, By Diversity Digest

Diversity, equity, and inclusion in companies are receiving a fillip with unique moves. While American stock exchange Nasdaq’s new rules have sought listed companies to divulge the diversity composition of their boards, Satrix Inclusion and Diversity ETF in South Africa has offered investors exposure to the 30 JSE-listed companies that demonstrate values of inclusion and diversity in the workplace.

Nasdaq: The Securities and Exchange Commission (SEC) recently approved Nasdaq’s latest proposal for the companies listed to disclose the details relating to diversity in their boards. The rules specify that companies listed have a diverse board or explain why they don’t have one within a stipulated period.

The new listing rules mandate two diverse directors– one who identifies as a woman and the other from the underrepresented minority or LGBTQI+ community. The rules are accompanied by a board recruiting portal that will enable the companies to access a network of diverse candidates for a limited period.

The new rules seek companies to be transparent about divulging the diversity statistics and compositions of their boards. The companies have to disclose statistical information in a board matrix format annually during annual meetings, annual reports, or on the company’s websites.

The compliance period for the new diversity objectives is determined by the Nasdaq tier. The new listing rules offer alternatives for smaller reporting companies (SRCs) and Foreign Issuers. SRCs can meet the diversity objective of having two female directors as an alternative instead of having a female director and one underrepresented minority or LGBTQ+ director. Foreign Issuers can meet the diversity objective with two female directors or with one female director and one director who is an underrepresented individual or LGBTQ+.

Satrix Inclusion and Diversity ETF:  South Africa’s asset management firm Satrix, and Refinitiv have come up with the Satrix Inclusion and Diversity ETF that offers investors exposure to stocks listed on the Johannesburg Stock Exchange (JSE), ranking them on diversity and inclusion. The key metrics include gender, race, physical ability, and background. The index rates the companies based on the economic, social, and governance (ESG) criteria. There are 25 measures classified under one of the four Inclusion and Diversity (I&D) pillars—diversity, inclusion, people development, and news and controversies. Each company is assigned a score for each pillar.

Companies with a non-zero score in each pillar are assigned an overall score. Ranked based on their overall score, the top 30 are included in the index.

Satrix has said that the ETF is an attempt to push companies to do better in terms of their DEI goals. While women constitute over 70 percent of total hiring in companies ranked high on DEI, the rate comes down to around 40 percent on the board. While the investment strives to offer support to companies that are more inclusive and diverse, it is expected to motivate companies to adopt practices and processes that will boost inclusion and diversity at their workplaces.

 

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