On June 9, the Federal Reserve Board, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency and Securities and Exchange Commission issued a final joint policy statement on diversity practices with respect to women and minorities. Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires that each such agency establish an Office of Minority and Women Inclusion (OMWI) to be responsible for all matters relating to diversity in management, employment and business activities. The statute also instructs each OMWI director to develop standards for assessing the diversity policies and practices of the agencies’ regulated entities. The final policy statement replicates many features of the 2013 proposed policy statement, and details steps for banks to improve diversity practices, including workforce management, and hiring and procurement, with respect to women and minorities. The statement further calls for institutions to be committed to diversity, and includes reporting standards and other ways for institutions to be transparent about their diversity policies.
To clarify whether the regulation is legally binding, the agencies added the following language to the final policy statement: “This document is a general statement of policy under the Administrative Procedure Act, 5 U.S.C. 553. It does not create new legal obligations. Use of the standards by a regulated entity is voluntary.” The agencies also defined the term “minority” as follows: Black Americans, Native Americans, Hispanic Americans and Asian Americans.” However, the agencies also stated that the minority (as defined) “does not preclude an entity from using a broader definition with regard to these standards.” In this respect, the agencies stated that this language is intended to be sufficiently flexible to encompass other groups if an entity wants to define the term more broadly. For example, a broader definition may include the categories referenced by the Equal Employment Opportunity Commission (EEOC) in its Employer Information Report EEO-1 and EEO-4, as well as individuals with disabilities, veterans and LGBT individuals.
Additionally, the agencies also agree that the concept of inclusion is important to cover in these standards because current leading practices advocate an inclusive culture as essential in the support of diversity and inclusion programs. Therefore, the final policy statement defines “inclusion” to mean a process to create and maintain a positive work environment that values individual similarities and differences, so that all can reach their potential and maximize their contributions to an organization. Finally, the agencies addressed the concerns of some smaller institutions as follows:
When drafting these standards, the agencies focused primarily on institutions with more than 100 employees. The agencies know that institutions that are small or located in remote areas face different challenges and have different options available to them compared to entities that are larger or located in more urban areas. The agencies encourage each entity to use these standards in a manner appropriate to its unique characteristics.
The specific subject headings addressed in the policy statement, along with the provision of standards to govern such headings, are as follows:
- 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
Finally, the policy statement states the following with respect to use by the agencies of information:
The Agencies may use information submitted to them to monitor progress and trends in the financial services industry with regard to diversity and inclusion in employment and contracting activities and to identify and highlight those policies and practices that have been successful. The primary federal financial regulator will share information with other agencies when appropriate to support coordination of efforts and to avoid duplication. The OMWI directors will also continue to reach out to regulated entities and other interested parties to discuss diversity and inclusion practices and methods of assessment. The Agencies may publish information disclosed to them, such as best practices, in any form that does not identify a particular entity or individual or disclose confidential business information.