Financial Regulators’ Policy Statement on Diversity

On June 9th, the Federal regulators who supervise U.S. financial institutions¹ issued their Final Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of the entities they regulate (Standards). The Standards, which can be found at: Standards for Assessing the Diversity Policies and Practices of Regulated Entities: Final Interagency Policy Statement, are a general statement of policy that do not create new legal obligations. The regulators "will not use their examination or supervisory processes in connection with these Standards." With that said, most of the principles that underpin the Standards are already embodied to some degree in existing employment laws, and the agencies likely will attempt to indirectly pressure their regulated industries to comply with the Standards. Moreover, failures to comply could become public relations issues for regulated entities.

Background

Under Section 342 of Dodd-Frank, each regulator was required to create an Office of Minority and Women Inclusion (OMWI). Those offices were created in 2011. To promote uniformity, the OMWI in each agency collaborated to create the Standards.

The Standards

The Standards are divided into five categories:

• 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
• Entities' Self-Assessment

Each category, in turn, includes a series of compliance objectives that are summarized below.

Organizational Commitment to Diversity and Inclusion Standards

• The entity includes diversity and inclusion considerations in both employment and contracting as an important part of its strategic plan for recruiting, hiring, retention and promotion.
• The entity has a diversity and inclusion policy that is approved and supported by senior leadership, including its board of directors.
• The entity provides regular progress reports to the board and senior management.
• The entity regularly conducts training and provides educational opportunities on equal employment opportunity, including diversity and inclusion.
• The entity has a senior level official who oversees and directs the entity's diversity and inclusion efforts.
• The entity takes proactive steps to promote a diverse pool of candidates, including women and minorities, in its hiring, recruiting, retention and promotion, as well as in its selection of board members, senior management and other senior leadership positions.

Workforce Profile and Employment Practices Standards

• The entity implements policies and practices related to workforce diversity and inclusion in a manner that complies with all applicable laws.
• The entity ensures equal employment opportunities for all employees and applicants for employment.
• The entity has policies and practices that create diverse applicant pools for both internal and external opportunities that may include:
  
  • Outreach to minority and women organizations;
  • Outreach to educational institutions serving significant minority and women student populations; and
  • Participation in conferences, workshops and other events to attract minorities and women and to inform them of employment and promotion opportunities.
• The entity utilizes both quantitative and qualitative measurements to assess its workforce diversity and inclusion efforts.
• The entity holds management at all levels accountable for diversity and inclusion efforts.

Procurement and Business Practices – Supplier Diversity Standards

• The entity has a supplier diversity policy that provides for a fair opportunity for minority-owned and women-owned businesses to compete for procurement of business goods and services.
• The entity has methods to evaluate its supplier diversity, which may include metrics and analytics related to:
  
  • Annual procurement spending;
  • Percentage of contract dollars awarded to minority-owned and women-owned business contractors by race, ethnicity and gender; and
  • Percentage of contracts with minority-owned and women-owned business sub-contractors.
• The entity has practices to promote a diverse supplier pool, which may include:
  
  • Outreach to minority-owned and women-owned contractors and representative organizations;
  • Participation in conferences, workshops and other events to attract minority-owned and women-owned firms and inform them of contracting opportunities; and
  • An ongoing process to publicize its procurement opportunities.

Practices to Promote Transparency of Organizational Diversity and Inclusion Standards

• The entity's diversity and inclusion strategic plan.
• The entity's policy on its commitment to diversity and inclusion.
• The entity's progress toward achieving diversity and inclusion in its workforce and procurement activities (which may include the entity's current workforce and supplier demographic profiles).
• Opportunities available at the entity that promote diversity, which may include:
  
  • Current employment and procurement opportunities;
  • Forecasts of potential employment and procurement opportunities; and
  • The availability and use of mentorship and developmental programs for employees and contractors.

Entities' Self-Assessment Standards

• The entity uses the Standards to conduct self-assessments of its diversity policies and practices annually.
• The entity monitors and evaluates its performance under its diversity policies and practices on an ongoing basis.
• The entity provides information pertaining to the self-assessments of its diversity policies and practices to the OMWI Director of its primary federal financial regulator.
• The entity publishes information pertaining to its efforts with respect to the Standards.

¹The Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Bureau of Consumer Financial Protection and the Securities and Exchange Commission.