Some companies weathered the economic storm created by the COVID-19 pandemic better than others, and the diversity of their boards may have been a factor, a new study suggests.

“Companies with diverse boards tended to do better in this time of transition,” according to a new report from Board Ready, a nonprofit that helps U.S. companies diversify their boards. 

The analysis looked at S&P 500

companies in the calendar years 2018, 2019 and 2020 and used year-over-year revenue growth to measure performance. The rate of revenue growth in 2020 was often negative because of the pandemic, “but relative measurements remain valuable indicators of performance, regardless of whether the growth was positive or negative,” the report said.

“The COVID-19 pandemic is a once-in-a-generation event impacting every industry and sector, offering a unique opportunity to measure which companies were able to withstand the economic downturn and which were less successful,” said Board Ready founder Deanna Oppenheimer.

“BoardReady’s findings make clear what board diversity advocates and governance best practices have known for years: Diverse boards perform better across the board.”

As of May 2020, every company in the S&P 500 had at least one woman on its board, according to the 2020 U.S. Spencer Stuart Board Index. Among new directors, 59% were women and minority men. 

‘Correlation doesn’t prove causation, of course. Nonetheless, it’s suggestive that companies with diverse boards usually did better in the pandemic than their less-diverse counterparts, even if we can’t prove why.’

— Board Ready

The Board Ready report’s findings included:

54% of companies with higher gender diversity, meaning women held 30% or more of board seats, had positive year-over-year revenue growth in 2020, compared to 45% of companies with lower gender diversity.  Collectively, revenue for all 500 companies was lower by $225 billion in 2020 than in 2019. “But among the 194 companies with higher gender diversity, year-over-year revenue grew overall by $58 billion (1.2%) versus a $283 billion (3.9%) drop for companies with lower gender diversity,” the report found.

Companies with 30% or more board seats filled by non-white directors performed better than their less-diverse counterparts. Their revenue growth rates increased from 3% in 2019 to 4% in 2020. Companies with fewer than 30% of seats held by non-white members saw revenue growth drop. However, the “understanding of the impact of racial diversity was limited by the low representation of racially diverse directors on S&P 500 company boards,” the report authors noted.

Companies with multigenerational boards fared better. Those with board members whose ages spanned more than 30 years saw their year-over-year revenues grow by 4.6%, while all other cohorts saw revenues fall.

“Correlation doesn’t prove causation, of course,” the report authors noted. “Nonetheless, it’s suggestive that companies with diverse boards usually did better in the pandemic than their less-diverse counterparts, even if we can’t prove why.” 

It could be the case that diverse boards make companies better, or that better companies tend to recruit diverse boards, or a bit of both, they wrote. “Regardless, companies lacking board diversity might reasonably consider whether they are on the wrong side of corporate history — and success,” the authors added.

Board diversity has been under scrutiny

The makeup of the boards leading America’s biggest companies has been under scrutiny in recent years, as the country has grappled with the effects of systemic racism and gender inequality. The resurgence of the #MeToo movement in 2017 prompted companies to add women to their boards, and 2020’s national reckoning over race saw many companies promising to increase the racial diversity of their directors. 

Progress has been slow. Since 2018, of the 974 board seats filled by directors new to Fortune 500 boards, 81% were filled by white directors and 54% were filled by white men, according to a June report by the Alliance for Board Diversity in collaboration with Deloitte.

California passed a law in 2018 requiring publicly traded companies in the state to have at least one, two or three women on their boards, depending on their size, by the end of 2021. As of May, women held 1,483, or 26.5% of the board seats at such companies — nearly double the 766 seats, or 15.5%, held by women in 2018.

Research has suggested performance and diversity are correlated

A 2018 McKinsey & Co. report found correlations between the diversity of a company’s leadership team and its profitability. Companies in the top quartile for gender diversity on their executive teams were 21% more likely to experience above-average profitability in 2017 than companies in the fourth quartile.

For ethnic and cultural diversity, McKinsey found a 35% higher likelihood of outperformance in 2014, and a 33% higher likelihood in 2017.

A 2014 analysis of 140 studies on women on boards found different results in different cultural contexts. Women on boards were positively correlated with accounting returns, and the effect was greater in countries with stronger shareholder protections, according to the authors of the study, published in the Academy of Management Journal.

And “although the relationship between female board representation and market performance is near zero, the relationship is positive in countries with greater gender parity (and negative in countries with low gender parity),” that study added.

See also: Most workers say companies should take action on racial injustice — but they haven’t heard the C-suite talk about the problem

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