Diversity, equity, and inclusion (DEI) have been proven as crucial components of sustainable organisational success with studies across industries demonstrating increased revenue, customer base, profit and innovation. While the debate of the value of the long-term value of DEI as a part of broader Environmental, Social, and Governance (ESG) has subsided, the role of board members and trustees in supporting the agenda beyond increasing the diversity of boards themselves has been inconsistent.
With Executive teams focused on immediate challenges and growth, the role of NEDs is increasingly important both to continue to diversify boards themselves and to ensure the decisions being taken underpin the long-term success of a business. While some organisations have formed ESG or DEI committees as part of their board structure, as the issues tend to intersect across several topics (e.g. Risk/Compliance, Technology, Compensation, Product Development) there is a need for boards to not only understand the implications of their decisions on employees, customers and stakeholders, but also to confront and mitigate any potential organisation threats these may pose in current and future state.
As a global DEI specialist, I’ve observed three key themes that significantly influence how organisations may need to navigate DEI and where board members should consider taking a more active approach in addressing:
✅ evolving regulatory environments,
✅ ensuring responsible AI, and
✅ addressing generational dynamics within the workforce.
1. Evolving regulatory environments and pressure to expand ESG reporting
One of the most pressing issues for companies, particularly in the US, is the shifting landscape of regulations concerning DEI. In the US, fear of future regulatory risks associated with reversals of key protections for affirmative action admissions have led some companies to retreat from DEI initiatives.
This trend contrasts with developments in Europe, Asia and Africa, where public DEI goals drive increased pay equity and representation of underrepresented groups in particular local talent (e.g. Saudisation in UAE, BBEE requirements in ZAF), persons with disabilities (hiring requirements in 20+ countries) and women (both on boards and in core workforce).
These regional disparities create potential conflicts for global companies striving to maintain consistent DEI standards across different jurisdictions and will require boards to understand the diversity measures and regulatory environments regionally that are most relevant to their business, customers, vendors, employees, investors and other stakeholders.
Coupled with increasing pressures on companies for commitments to sustainability, there is increased pressure from customers, employees, shareholders and governments for companies to report on progress across ESG initiatives. For many, ESG now includes DEI as a key component. For example, in the US, the Securities and Exchange Commission (SEC) has begun to regulate diversity disclosures to ensure organizations are meeting their public commitments.
As stakeholders demand greater transparency, boards should encourage the connection of DE&I goals to the company values and purpose, the integration of DEI into their ESG reporting as well as implement measures to ensure progress is tracked.
2. Ensuring responsible AI
Inclusive Products/Services design remains both a risk and an often overlooked opportunity to grow/expand businesses. Artificial Intelligence exemplifies the risks and missed opportunities associated with non-inclusive data. Specifically, as generative AI tools are trained on biased historical data sets and models (e.g. gender biased, race biased, ability biased), they risk perpetuating exclusionary practices, and sidelining large segments of customers and the workforce.
Organisations and governments are increasingly recognising the importance of addressing bias, transparency, accountability, and fairness in AI systems. As such businesses will be expected to deploy automation in responsible ways that drive DEI within their organisation, while mitigating AI-related risks and using the technologies to unlock the full innovation capacity of their workforce, products and services.
Boards must be vigilant in overseeing AI ethics, ensuring that these systems are developed and implemented responsibly. This involves a review of internal practices, understanding the intended outcomes and partnering closely with those leading the work within the organisation.
3. Generational talent dynamics and the importance of inclusive culture
For the first time in history, today’s workforce encompasses four generations. Managing the expectations and needs of this diverse age range poses unique challenges, particularly in balancing the innovative energy and new skills of younger employees with the invaluable and deep experience of experienced talent.
Additionally, new generations of talent demand a strong sense of community and commitment to DEI from their employers. According to a recent study by Monster, 83% of Gen Z candidates said that a company’s commitment to DEI is important when choosing an employer and another study by Handshake, found nearly half of Gen-Z workers would consider leaving a job if they perceived a lack of equity. This alignment with social values is critical for attracting and retaining young talent.
As companies continue to refine the future of work, an inclusive culture is essential for the sustainability of organisations. Companies that prioritise inclusive cultures, equitable policies and benefits and are better positioned to adapt to changes, innovate, and support employee retention and increase commitment to long term success. As a result, companies are better positioned to thrive in a competitive market.
Research done by Cloverpop and Forbes showed that inclusive teams make better business decisions 87% of the time, and that teams that follow an inclusive process make decisions two times faster with half of the meetings. This requires an effort to understand and integrate diverse perspectives at all levels of the organisation, starting with inclusive practices in the boardroom.
Conclusion
The journey towards comprehensive DEI is rapidly evolving, highly complex and multifaceted. And while management teams remain responsible for driving DEI in the business, board support and oversight is vital to the success of these efforts. Board members must remain committed to the role of DEI as a strategic advantage to organisations and take steps to actively imbed critical questions and practices throughout their practices.
Liz Gebhard is a NEDonBoard member and serves as an advisory board member for Social Shifters, a non-profit helping the next generation of young innovators, and entrepreneurs to tackle the world’s most pressing social and environmental issues in new ways. She is also a member of the Gender Equity Collective and a founding member of the Women Leaders Forum. She is a global organisation, business and thought leader in Forbes Top 20 Industry leading companies and over the last three years transitioned from leading business to lead global Inclusive Technology and DEI efforts at Amazon for employees, communities and customers.
Related resources
Inspire inclusion in and from the boardroom
Why making ED&I a high priority for boards is so powerful
Why boards can’t lie about Diversity, Equity and Inclusion
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