Earlier this week, I wrote about the classifications used by ISS in determining whether a director is "diverse". In short, I found ISS' scheme illogical and perverse. California's board diversity mandate uses different categories, but does not define them. Cal. Corp. Code ยง 301.4(e)(1). California, moreover, focuses solely on how a director's self-identification as a member of an "underrepresented community". ISS does not. ISS identifies and sources racial and ethnic characteristics directly from corporate filings, as well as direct feedback in response to ISS' outreach to U.S. companies. Thus, the information may, or may not, be based on a director's self-identification.
I find that matters become more than a little invasive and downright creepy when a company does not disclose the racial and ethnic characteristics of its directors. When this happens, ISS says that it "carefully" assesses racial and ethnic characteristics "through a variety of publicly available information sources". According to ISS, these sources include "company investor relations websites, LinkedIn profiles, press releases, leading news sites, as well as through identifying affiliations between individuals and relevant associations and organizations focused on race and/or ethnicity, such as the Latino Corporate Directors Association". So it seems that ISS can, and will, assign racial and/or ethnic characteristics based on a director's club membership.
Originally published May 21, 2021
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