Lawmakers and Regulatory Agencies are Prioritizing DEI and Starting with the Financial Industry
As far back as 2006, the United States Equal Employment Opportunity Commission (“EEOC”) has given close attention to Diversity, Equity, and Inclusion (or lack thereof) in the United States Financial Sector. During that year, the agency published a report that concluded the financial industry had some of the worst representation of women, African Americans, Asian Americans, and Hispanics as managers and officials.
In response to the EEOC and other studies on the topic, Congress included specific language in the Dodd-Frank Wall Street Reform Act of 2010, authorizing certain federal agencies to assess the diversity practices of the entities they regulate. More than ten years later, the industry is finally being held accountable for its shortcomings. Likely, other industries will soon follow suit or be faced with Congressional or Executive action requiring their members to disclose their practices and/or improve them.
As an example of increased regulatory activity in the financial sector, the Consumer Financial Protection Bureau (“CFPB”) recently went over and above its Dodd-Frank mandated oversight responsibility to develop 20 criteria for rating a financial firm’s DEI program. Highlights of the CFPB’s criteria in its evaluation process include:
· The presence of clear statements that affirm a commitment to diversity and inclusion on a company’s website, careers page, or from senior leadership;
· The workforce diversity metrics an entity publishes;
· Public information regarding internal practices like recruitment strategies,
· Diversity, equity, and inclusion training, or employee resource groups; and
· Supplier diversity programs.
The fact that the CFPB is taking DEI so seriously should not be a surprise, as this area has received much attention in the past year. Indeed, President Joe Biden signed an Executive Order mandating greater diversity, equity and inclusion in the federal (and federally regulated) workforce in June 2021, and in 2020 Congress held a special hearing to review diversity and inclusion practices at America’s large banks. As DE&I receives more attention from the federal government, it is only a matter of time where this sector will see full-scale legislation mandating commitment to diversity similar to what is being required by the CFPB.
If your organization operates in the financial sector (and even if it does not), it is time to examine your DEI practices. Using the criteria set forth by the CFBP to benchmark your efforts (regardless of industry) is a proactive way to get ahead of potential legislative requirements and put a program in place that will protect your organization from EEO issues such as claims of discrimination.
It is no surprise that the CFPB included diversity, equity, and inclusion training on its list of criteria for evaluation, and conducting regular and routine training and workshops on the topic is one way to ensure the lines of communication regarding DEI are open at all times within your organization. No longer is it sufficient to formulate a policy and claim a commitment to DEI, rather the modern organization must show that it is taking active steps to implement a training plan and maintain a commitment to diversity, as well as take active steps to show that diverse members are given a voice and are treated on equal footing with all other members of the organization.
Undertaking a DEI Training initiative is no small task, but it does not have to be a burden. Indeed, several significant cultural improvements can occur when an organization buys into and commits to giving representation to diverse members of its workforce and giving those members an equal voice. Syntrio has developed a wide variety of diversity, equity, and inclusion products to help your organization meet its goals in this area, regardless of industry. We hope you will contact a member of our team to see how we can jump-start your efforts to keep up with growing regulation and legislation in this important area