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More companies are responding to investor pressure by disclosing information about employees’ race and ethnicity, a report from Sustainalytics says, but the majority of companies still disclose no such data — making it difficult for investors focused on social issues.

The Morningstar Inc.-owned ESG research provider assessed race and ethnicity data, collected from 2015 to 2019, from 685 North American mid- and large-cap companies. The report released Tuesday examined the information that companies provide in relation to the categories covered by the U.S. Equal Employment Opportunity Commission (EEOC), which firms must use when collecting their racial demographics.

The report said only 269 of the 685 companies disclosed any relevant information about their employees’ ethnicity and race, with 61% disclosing no data at all.

Only seven of the 685 companies publicly disclosed more than 120 of the 180 data points required on an EEOC form.

Still, from 2015 to 2019, Sustainalytics found a 335% increase in the number of ethnicity disclosures. And of the 65 firms that disclosed relevant data about upper management, those with diverse teams delivered greater one- to five-year returns in 84% of cases, the report said.

“The events of 2020 and 2021 related to racial discrimination in North America heightened the interest of investors to seek greater progress on racial equity in the workplace,” the report said.

But while interest in companies’ racial diversity has increased, it’s still very difficult for investors to find that information. The report noted that companies choose not only if but also how to disclose racial data, making it even harder to compare data.

“Investors developing strategies that draw on racial diversity disclosures face three major challenges: an overall lack of public disclosures, inconsistent reporting and outdated classification templates,” the report said.

One option for investors is to use shareholder proposals to demand greater disclosure. The report noted that such proposals have increased in recent proxy seasons, often encouraging companies to disclose EEOC data and to increase the level of diversity in upper management. It also said momentum is likely to build, leading to more regulated disclosures and public scrutiny of company practices.

“Investors with an interest in improving racial diversity in their holdings could focus their engagements on companies that demonstrate the largest gaps between their overall workforce diversity and senior management diversity,” the report said.

The sectors with the largest gaps in minority representation in upper management compared to the overall workforce were basic materials, consumer cyclical and consumer defensive, the report said. Financials, technology and communication services have the most companies with more diverse upper management.

“Considering the mounting consensus about the material benefits of diversity, some investors have come to see the lack of diversity in corporate leadership as a source of portfolio value leakage,” the report said.

Sustainalytics found that racial diversity was particularly low with respect to Black, Hispanic and Indigenous employees in upper management.

The 2019 U.S. census identified 43.6% of the population as ethnic minorities, which roughly aligned with the sample where minorities made up roughly 40.8% of the workforce. But that representation dropped to only 22.1% in upper management.

Black, Hispanic and Indigenous people represented 33.4% of the population in that census, but only made up 24% of the workforce in the report’s sample and only 9.2% of upper management.

“Strong representation across ethnic groups may indicate that leadership brings diverse perspectives and may be reflective of strong organizational hiring practices,” the report said. “Companies seeking to achieve full representation would include more Black, Hispanic and Indigenous employees in their senior ranks.”