CFPB Highlights the Value of Public Commitment to Diversity, Equity, and Inclusion

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 report¹ that signifies it will also be more closely examining the role of diversity and inclusion in financial institutions.

Evaluation of Regulated Entities for Diversity and Inclusion Criteria

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:

1. Organizational commitment to diversity and inclusion
2. Workplace profile and employment practice
3. Supplier diversity; and
4. Practices to promote transparency of organizational diversity and inclusion

The CFPB also evaluated whether the organizations had publicly available information regarding diversity and inclusion on their websites or public documents.

CFPB Recommendations

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:

• Expanding their value statements to include diversity and inclusion
• Issuing a leadership statement to underscore a top-down commitment to DEI issues
• Emphasizing the value the organization places on hiring diverse employees on its career recruitment page
• Issuing statements emphasizing supplier diversity initiatives

Midsize organizations: Recommendations for midsize organizations included:

• Publicizing leadership diversity, internal programming such as recruiting efforts, and other programming such as diversity councils or committees
• Expanding their recruiting programs by sharing recruiting opportunities and job fairs on their website and instituting recruiting efforts targeted at minority-serving institutions
• Publicizing workplace development initiatives, including those for women and communities of color

Larger organizations: For larger institutions with more resources, the CFPB recommended:

• Hiring a designated diversity and inclusion leader, such as a chief diversity officer
• Targeted advertising of recruitment efforts toward minority-serving institutions and publicizing recognition for diversity and inclusion initiatives
• Expanding diversity and inclusion metrics to be more granular
• Highlighting workforce development programs, especially those aimed toward women or communities of color

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.