Illinois public companies are more sensitive to the need for gender, racial and ethnic diversity on their boards, though progress in these areas has been mixed, a study by researchers at the University of Illinois.
The report found that women’s representation on the board, despite notable gains, is lower than their overall representation in the workforce. Racial and ethnic minorities remain underrepresented, particularly in the case of Latinos, researchers have found.
But the report also highlighted greater corporate awareness of diversity issues. Its findings are based on 97 companies that complied with a state law in 2021 requiring them to report on diversity in the composition of their board of directors. It also asks them to summarize any policies to promote diversity on their board.
The same study was done for business filings in 2020, and it found only 74 companies complying with the law.
Increased compliance bodes well for more progress on diversity in corporate leadership, said Richard Benton, associate professor of sociology at the University of Illinois and co-author of the report. “Everything companies care about, they measure.”
The state law, signed into law in 2019, focuses businesses’ attention on inclusion, Benton said. He wrote the report with Assistant Professor Eunmi Mun. Both are affiliated with the U of I School of Labor and Employment Relations.
Their review of 2021 filings shows that 80% of companies listed two or more female directors, compared to 67% in 2020 filings. In 2021, 50% of companies reported having at least two non-white directors, compared to 35% in 2020.
“Although a handful of companies are leading the way in terms of board diversity, there is still wide variation as many companies have unrepresentative boards,” the report said. For example, he said 76% of companies submitting reports had no directors who identified as Hispanic or Latino, who make up 16% of the state’s total population.
Blacks, who make up about 14% of the state’s population, are not included on the boards of 37% of companies, the report said.
He highlighted policies several companies have adopted to promote diversity, such as Morningstar’s goal of interviewing teams with a 50-50 gender split for hiring senior executives. WW Grainger, according to the report, uses an executive search firm to secure diverse candidate slates for open board seats, while Nuveen and Discover Financial Services have supported internal women’s networking efforts.
Benton said many companies are responding to pro-diversity laws that several states have enacted or are considering. “It’s a space that’s moving very quickly,” he said. The Nasdaq now requires board diversity reporting for its listed companies.
Illinois law requires an annual report but does not set a diversity minimum. It does not apply to private companies or those that are publicly traded but based outside of Illinois.
Todd Maisch, president and CEO of the Illinois Chamber of Commerce, said companies are concerned that state law will be changed to set standards for board members. “Disclosure is fine, but very often disclosure is a predecessor to warrant,” he said.
Speaking for himself and not his members, Maisch said nearly every executive he meets values diversity in company leadership and the workforce. “They want to be as diverse as possible, but it has to make sense to them,” he said. “It’s a complex question. The answers are not simple.
The report’s findings are similar to an examination of racial diversity on boards and in the workplace by companies on the Russell 3000 Index. Released this year by ISS Corporate Solutions, the analysis found that directors not whites on boards are increasing, but still only 17% of the total.
ISS, which monitors corporate governance issues, said there had been an increase in shareholder resolutions dealing with racial diversity.
In an article published last year by Northwestern University, R. Mark McCareins, a clinical professor of business law, said that while state regulations are a factor, shareholder attention has forced more companies to consider their diversity background.
“If I’m a public company, whether or not I’m currently state or federally regulated, I’ll probably also be concerned about what my investor base — and especially my institutional investors — think about this issue,” he says. in the article.
Gender, Racial Diversity on Illinois Boards of Directors
Illinois-based public companies
Female board members
Company % of women
SFO Credit Co. 75
Ultimate Beauty 54
SFO Capital 50
Yunhong CTI (4 tied) 40
the morning star
Professional Diversity Network
Premier Busey (3 tied) 10
United States Cell 9
SI Bancorp (2 tied) 0
Race and ethnicity
Percentage of non-white directors
Yunhong CTI (2 tied) 60
Professional Diversity Network
Adtalem Global Education 55
OFS Capital (2 tied) 50
OFS Credit (tied)
18 companies 0
Source: University of Illinois compilation of 97 corporate reports filed in 2021 with the Illinois Secretary of State.