Proposed Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies
If you are a financial institution regulated by the OCC, the Fed, the FDIC, the SEC, or the NCUA, diversity policies and practices are evolving. Not only is there a greater expectation to use minority-owned suppliers, but new self-assessment procedures are being added to document the success of an institution’s diversity policies.
Comments on the proposal are due by December 24, but this information is still relevant after that date for the affected institutions seeking to anticipate where the regulators are heading. Diversity is an ever-changing subject and financial institutions (FIs) would be wise to be current on all proposed amendments regarding this issue.
The five regulatory agencies have jointly proposed standards for assessing diversity policies and practices by the entities they regulate. Here’s what the proposal entails.
The standards come from the Office of Minority and Women Inclusion (OMWI Office), which each regulator was required to establish under the Dodd-Frank Act. Entities that have more than 100 employees or that are federal contractors with 50 or more employees and with contracts of $50,000 or more are required to file an Employer Information Report EEO-1 with the Equal Employment Opportunity Commission and the agencies have recommend that these entities use this data along with the proposed standards to assist them in developing their internal diversity policies and practices. Regulated entities that do not file EEO-1 Reports are encouraged to use the proposed standards as their guide in developing their internal policies and practices.
The proposal looks at five different aspects of diversity management and provides proposed standards for each area. The areas and the proposed standards are as follows:
Organizational Commitment to Diversity and Inclusion Standards (to reflect commitment):
- Include diversity and inclusion considerations in both employment and contracting;
- Implement a board policy that is supported by senior management;
- Provide regular progress reports to the Board and senior management;
- Conduct regular equal employment opportunity and diversity education and training;
- Appoint a senior level official to oversee and direct the entity’s diversity efforts; and
- Take proactive steps to promote diverse pools of candidates for employment, promotions, and the Board.
Workforce Profile and Employment Practices (to track and measure inclusiveness):
- For entities that file an annual EEO-1 Report or otherwise track their workforce data, use that data to evaluate and assess diversity and inclusion efforts;
- If applicable, use affirmative action plans to assess diversity and inclusion efforts;
- Use metrics to evaluate statistics regarding recruitment, applicant tracking, hiring, promotions, separations, career development support, coaching, executive seminars, and retention;
- Hold management accountable for diversity and inclusion efforts; and
- Adopt policies and practices that create diverse applicant pools for both internal and external employment opportunities.
Procurement and Business Practices (to encourage supplier diversity):
- Adopt a supplier diversity policy that provides for a fair opportunity to minority-owned and women-owned businesses to compete for business with the institution;
- Establish methods to evaluate and assess the diversity of your suppliers; and
- Employ practices to promote a diverse supplier pool, including outreach to minority-owned and women-owned contractors and representative organizations along with other similar activities.
Practices to Promote Transparency of Organizational Diversity and Inclusion:
Make information, such as the institution’s diversity and inclusion strategic plan, current workforce and supplier demographics, and employment opportunities available to the public on an annual basis through the institution’s website or other communication channels.
Conduct a Self-Assessment:
The agencies believe a self-assessment process will provide valuable information to both the agencies and to the public. The agencies say that they will not use the examination or supervision process in connection with these proposed standards. However, they do state that they may periodically review information on an institution’s public website to monitor diversity and inclusion practices.
In conducting the self-assessment, the institution should consider:
- Using the proposed standards in this guide to conduct a quantitative and qualitative evaluation of the institution’s diversity and inclusion policies and practices;
- Voluntary disclosure to the appropriate agency of self-assessment and other information the institution deems relevant; and
- How information regarding diversity is communicated to the public and in the institution’s annual report.
By keeping up to date with these proposals, financial institutions will be ahead of the game as these rules take shape in the months and years to come.