Lawmakers and Regulatory Agencies are Prioritizing DE&I 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.
Partly 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 on the subject, and it is likely that 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 DE&I 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 and inclusion trainings, or employee resource groups; and
· Supplier diversity programs.
The fact the CFPB is taking DE&I so seriously should not be a surprise, as this is an area that 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) now is the time to examine your DE&I 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 and inclusion trainings on its list of criteria for evaluation, and conducting regular and routine trainings and workshops on the topic is one way to ensure the lines of communication regarding DE&I are open at all times within your organization. No longer is it sufficient to formulate a policy and claim a commitment to DE&I, rather the modern organization must show that it is taking active steps to implement a 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 DE&I initiative is no small task, but it does not have to be a burden. Indeed, there are a number of significant cultural improvements that can occur when an organization buys into and commits to not only giving representation to diverse members of its workforce, but also giving those members an equal voice. Syntrio has developed a wide variety of diversity, equity and inclusion products that can 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.