On March 15, 2021, the FDIC’s Office of Minority and Women Inclusion (OMWI) released a Financial Institution Letter regarding diversity self-assessments. In accordance with Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the FDIC is calling on its supervised institutions with 100 or more employees to submit voluntary self-assessments of their diversity policies and practices. The FDIC’s request mirrors those by shareholder activists to obtain greater disclosure from corporate boards on the efficacy of their diversity programs. The window for submissions for the 2020 reporting period is open until June 30, 2021.
This voluntary review seeks to evaluate the diversity policies and practices in five key areas:
- Organizational commitment to diversity and inclusion;
- Workforce profile and employment practices;
- Procurement and business practices/supplier diversity;
- Practices to promote transparency of organizational diversity and inclusion; and
- The entities’ self-assessment.
The letter reiterates that participation “in the Financial Institution Diversity Self-Assessment (FID-SA) is voluntary but encouraged,” for covered financial institutions.
Although the standards remain voluntary, Financial Services Committee Chairwoman Maxine Waters (D-CA) is focused on identifying methods to increase compliance among federal financial regulatory agencies tracking diversity and inclusion efforts.
In February 2020, the Financial Services Committee and the Subcommittee on Diversity and Inclusion released the report, “Diversity and Inclusion: Holding America’s Large Banks Accountable.” The report indicates that banks’ boards of directors and senior staff are still not diverse, but an increased number of banks have achieved pay equity, and most have a ratio of male to female employees reflective of the country’s population.
Additionally, the report concluded that to ensure compliance with the original intent of Section 342, Congress should consider legislative action in the following three areas:
- “Require that banks share diversity and inclusion data with their regulators and the public;
- Require banks to track and make efforts to increase their spending with diverse firms; and
- Require banks to publicly disclose the diversity of their boards.”
Ballard Spahr’s Diversity & Inclusion Legal Team will continue to monitor regulatory and legislative updates in this area. The team consists of Ballard Spahr lawyers from several practice groups who regularly advise financial institutions and other organizations on conducting gap assessments and developing strategic plans to address diversity, equity, and inclusion.