Dive Brief:
- The Securities and Exchange Commission began its biennial collection of Diversity Self-Assessment data from public companies and other entities the agency regulates on Wednesday. The agency said the voluntary appraisals will allow organizations to “closely review” their diversity and inclusion policies for strengths and weaknesses.
- The agency released a self-assessment questionnaire the same day, but also invited organizations to submit assessments in a format of their choosing. The agency said the review will also give firms a view of their organizational opportunities, risks and vulnerabilities associated with its diversity and inclusion practices.
- The SEC said it will use any data submitted to the agency to assess and report on any trends and progress it sees among its regulated entities’ diversity-related activities. The questionnaire asks about organizational commitment to diversity, implementation of workforce diversity practices and supplier diversity, as well as a demographic breakdown of the entity.
Dive Insight:
The Diversity Self-Assessment is not a part of the SEC’s examination process, but is conducted by the agency’s Office of Minority and Women Inclusion in accordance with a 2015 Joint Policy Statement implementing the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
The joint standards recommend regulated organizations do diversity self-assessments annually, but they are only asked to submit those to the SEC every two years.
OMWI Director Nathan Benjamin said it is “critical” that its regulated entities participate in the self-assessment process. He said in the release that the data will provide “more comprehensive understanding of the diversity practices and policies that are being implemented as well as to share information on practices and identify opportunities.”
The SEC’s oversight as U.S. securities market regulator gives the agency purview over investment firms and advisors; securities brokers and dealers, including from the government and municipalities; and self-regulatory organizations like national securities exchanges and registered clearing agencies. The agency also regulates major security-based swap participants and security-based swap execution facilities and data repositories, as well as third-party transfer agents, securities information processors and credit rating agencies, according to a Frequently Asked Questions list the agency also released.
The questionnaire also asks organizations whether firms undertake ongoing monitoring of their diversity and inclusion policies’ performance; whether they use the joint standards to monitor that performance; if they publish that assessment information. It also asks about their practices to promote the transparency of their organizational diversity and inclusion.
“Firms that have successful diversity policies and practices devote time and resources to monitoring and evaluating performance under their diversity policies and practices on an ongoing basis,” the self-assessment said. “Firms regulated by the SEC are encouraged to disclose their diversity policies and practices, as well as information related to their assessments, to the SEC and the public.”
The section for entities to disclose their organizational gender, race and ethnicity demographics has breakouts for analysis by seniority level, in addition to the breakdown for all employees. The questionnaire also asks entities to disclose the demographic characteristics of their boards, as well as their total procurement spend and breakdowns for procurement spend to minority-owned and women-owned businesses.
