Do more on diversity, SEC urged by ex-chairs

7 March 2023

The Securities and Exchange Commission (SEC) could be doing more in its work to improve diversity within the US financial services industry, several of its former chairwomen have agreed.

At an event held by the SEC’s Office of Minority and Women Inclusion (OMWI), the regulator’s work on the collection of diversity data was put under scrutiny.

Here, several attendees agreed that the organisation could exert more of its influence to encourage greater transparency among the companies it regulates.

Former chairwoman Mary Schapiro, who headed up the SEC from 2009 to 2012, argued at the event the regulator was underutilising its authority to urge companies to do more.

She said: “I do think the chair of the agency and the commissioners could really use the bully pulpit and really push the firms to provide [diversity] information and to do the [diversity assessment.”

The US regulator has been increasingly pushing regulated entities to disclose more on the issue of diversity but with underwhelming results.

Between 2018 and 2020, regulated firms were invited to voluntarily disclose information to the regulator about their diversity policies and practice.

In this time the response rate only increased from 5% to 9%. For 2020 this equated to only 118 companies, out of a potential 1,263, responding.

Results for 2022’s disclosures have yet to be released.

However, with the SEC about to release over 50 regulations targeting ESG issues in 2023, other OMWI members conceded further legislation may not be the best way to increase such disclosure.

Former SEC chairwoman Mary Jo White, who headed up the regulator from 2013 to 2017, argued there could be a “fatigue issue” among firms when it came to ESG reporting.

Here, she added it may make better sense for the regulator to utilise the data regulated firms are increasingly publishing in response to shareholder proposals.

“Is there some way that you can essentially piggyback, perhaps, on some other disclosures that are being made?” asked White. “I would explore whether you could do that.”

In addition, White – who made diversity one of her key priorities during her tenure – advocated for the SEC to coordinate such efforts with other regulatory bodies such as the US Department of Labor.

This would “make it harder to say no”, suggested White.