The Bank of America Global Research team says that the continuing lack of diversity in corporate America can prove very costly for the US economy in the long run.
“Continued racial inequality could cost the U.S. economy $ 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 study on Wednesday.
The Israeli team highlights some gloomy statistics about where things stand on corporate diversity. Ultimately, the numbers suggest the US economy could see the lost trillions that BofA refers to if leaders do not more powerfully increase diversity work.
According to BofA’s results, there were no black senior executives in any of the FTSE 100 companies. Women collect assets 1.5 times faster than men, states BofA, but there are more men named “Dave” in the UK’s financial industry than women who manage funds. At the same time, there are now only three black executives in the Fortune 500.
BofA offers some simple suggestions to corporate America to start reversing the unfortunate statistics.
“D&I must go hand in hand. Although public and business understanding of the importance of diversity has improved in recent years, we believe that inclusion does not have and needs to be promoted more generally. COVID (flexible work from home, childcare support), Gen Z (hashtag activism, “Click activists”) and ESG assets ($ 20 trillion over the next 20 years) are just some of the catalysts that can change this, says the Israeli team.
At the absolute minimum, the results for more diverse and inclusive companies should get more leaders to act.
BofA’s ESG team finds that S&P 500 companies with gender diversity above the median on their boards see a 15% higher return on equity. For companies with ethnic and racially diversified labor, the return on equity is 8% higher. More different companies look lower income risk one year compared to less different colleagues. Doing good goes well.
“Diversity means increasing returns, sales and lower profit volatility risk,” says BofA’s team.
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