As Environmental, Social, and Governance (ESG) issues continue to be prominent in discussions on the sustainability of the financial sector, many agencies have taken a closer look at social issues, in addition to the heightened focus on the risk of climate change. In January, the Consumer Financial Protection Bureau (CFPB) issued a report that signifies it will also be more closely examining the role of diversity and inclusion in financial institutions.
On January 19, 2022, the CFPB’s Office of Minority Women and Inclusion, as part of its charge to develop standards for assessing diversity and inclusion in regulated financial institutions, released the CFPB Report on Diversity and Inclusion within Financial Services. The objective of the report was to provide financial institutions of different sizes an understanding of what its peers are doing to promote diversity, equity, and inclusion (DEI). Using publicly available data, the CFPB evaluated 270 regulated entities, taking into account industry and size grouping, and assigned ratings on a range of criteria that demonstrate:
The CFPB also evaluated whether the organizations had publicly available information regarding diversity and inclusion on their websites or public documents.
The report concluded with recommendations for small, midsize, and larger organizations to improve the publicly available diversity and inclusion information, taking into account the relative resources available to institutions of varying sizes.
Smaller organizations: The CFPB recommended that smaller organizations publicize their commitment to diversity and inclusion through a series of statements, including:
Midsize organizations: Recommendations for midsize organizations included:
Larger organizations: For larger institutions with more resources, the CFPB recommended:
The CFPB’s report is yet another signal that financial institutions should consider enhancing their diversity and inclusion programming as a top priority. The CFPB’s report acknowledges the varying resources available to financial institutions of different sizes and that improving diversity and inclusion is a process that might take time. Financial institutions of all sizes should take stock of their current programming through a self-assessment and begin to chart a path to demonstrated organizational commitment to diversity and inclusion.