An article based on Associate Professor Atinuke Adediran’s paper on the practice of disclosing diversity statuses of corporations, forthcoming in the Virginia Law Review, was published in the Harvard Law School Forum on Corporate Governance.
Since 2020, diversity has become a central concern for corporations and their leaders, prompting many corporations to voluntarily integrate gender and racial diversity in particular, into their Corporate Social Responsibility (“CSR”), or Environmental, Social and Governance (“ESG”) disclosures. In my paper, Disclosing Corporate Diversity, I use machine-learning techniques to analyze 3,461 CSR/ESG reports for 1,288 public companies listed on Nasdaq Stock Market LLC (Nasdaq) and the New York Stock Exchange (NYSE) for the five-year period between 2017 and 2021. I provide empirical evidence that in the last five years, public companies have firmly integrated diversity disclosures into their CSR/ESG disclosures.
I argue that these disclosures are important not only for shareholder transparency, but that they can be used instrumentally to increase corporate diversity for other stakeholders, including employees, suppliers, customers, community members, advocacy groups of various types, activists, reformers, and the public. I note that scholars and others have underappreciated this possibility for two reasons. The first is that scholars routinely write about disclosures in the context of CSR/ESG, but not often in the context of corporate diversity, even though diversity is part of CSR/ESG. The second is about the limits of the securities laws. Like other forms of disclosures under the securities laws, diversity disclosure rules often focus on shareholder transparency rather than to address concerns about the lack of diversity in corporations for all stakeholders.