The Bank of America Global Research team says the continued lack of diversity inside of corporate America could prove very costly to the U.S. economy in the long-run.
"Continued racial inequality could cost the U.S. economy US$1-1.5 trillion in lost consumption and investment over the next decade," BofA's team led by Haim Israel said in an exhaustive new piece of research out on Wednesday.
Israel's team highlights some bleak stats on where things stand on corporate diversity. Ultimately, the numbers suggest the U.S. economy could see those lost trillions referenced by BofA if leaders don't more forcefully step up diversity efforts.
According to BofA's findings, there were no Black senior executives in any of the FTSE 100 companies. Women are gathering assets 1.5 times faster than men, BofA notes, but there are more men called "Dave" in the U.K.'s financial industry than women managing funds. Meanwhile, there are now only three Black chief executives in the Fortune 500.
BofA offers up some simple suggestions to corporate America to start reversing the unfortunate stats.
"D&I must go hand in hand. While public and corporate understanding of the importance of diversity has improved in recent years, we believe Inclusion hasn't and needs to be more widely promoted. COVID (flexible work from home arrangements, childcare support), Gen Z (hashtag activism, "clicktivists") and ESG assets (US$20 trillion over next 20 years) are just some of the catalysts that could change this," Israel's team contends.
At the bare minimum, the performance of more diverse and inclusive companies should be springing more leaders into action.
BofA's ESG team finds that S&P 500 companies with above-median gender diversity on their boards see 15% higher returns on equity. For companies with ethnic and racially diversified workforces, that return on equity is 8% higher. More diverse companies see lower earnings risk one year out compared to less diverse peers. Doing good is doing well.
"Diversity means boosting returns, sales, and lower earnings volatility risk," BofA's team says.
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