August 12, 2021
Diversity and Inclusion continues to be a hot topic within corporate America, with more and more regulators—including the New York State Department of Financial Services—chiming in. Recognizing the intrinsic benefits of a more diverse and inclusive workforce, DFS is adopting the approach seen in several other states by requiring reporting activity on diversity-related statistics from certain DFS-regulated banking institutions and DFS-regulated non-depository financial institutions as well as all entities permitted to conduct virtual currency business. DFS's move to regulate this area follows similar action by Nasdaq, which recently passed a new rule requiring companies to disclose particular board-level diversity statistics and to have at least two diverse board directors—if a company does not meet this latter requirement, the company must provide an explanation. While DFS does not go so far as to mandate certain levels of diversity on boards or at the management level, the reporting requirement alone is likely to encourage financial institutions to take steps to increase diversity, just as DFS intends.