News Article

Communicating Progress on DEI Initiatives
Date: Aug 29, 2022
Source: Company Data ( click here to go to the source)

Featured firm in this article: Diamond Head Research LLC of Honolulu, HI

Pros and Cons of Using the EEO-1 Report

August 29, 2022. For many HR executives, completing the annual EEO-1 report is about as much fun as filing your taxes. For those unfamiliar with the EEO-1 report, it is a mandatory annual report required by all private sector employers with 100 or more employees to submit demographic workforce data, including data by race/ethnicity, gender, and job categories to the US Equal Employment Opportunity Commission. This activity is required of US employers under Title VII of the Civil Rights Act of 1964.

The data collected by the government in the EEO-1 report is confidential unless the company chooses to publicly disclose it. Historically, few companies have voluntarily done so, with some estimates indicating that less than 10% of the largest US firms publicly release this data.

More recently, however, some ESG and CSR executives are opting to share their company's EEO-1 report with the public to demonstrate progress on diversity, equality, and inclusion (DEI) initiatives in their organizations. In fact, companies are starting to publish copies of their EEO-1 reports on their websites and in their annual CSR and ESG reports to show full transparency to shareholders and stakeholders alike.

Social movements like the BlackLivesMatter, Me Too, and Pro-Choice movements, have further accelerated the need for employers to show progress on these important issues. In our own research at DHR, we have found that 61% of those surveyed in our 2022 CSR Employee Sentiment Survey consider a company's commitment to these issues to be a significant factor in deciding which company to work for. The EEO-1 form has become an easy, convenient way to demonstrate a company's commitment and progress on these types of issues.

However, it is important to note that employers should not expect the EEO-1 report to tell a full or complete story about their commitment or progress on DEI issues. In fact, there are several areas where the EEO-1 report falls short, even creating unnecessary confusion, if additional detail and context are not provided when using the EEO-1 report as evidence of DEI progress.

One example of this shortcoming of the EEO-1 report is in the tracking of sexual orientation and gender. The report generally defines gender with binary male and female options. There are no other requirements to report sexual orientation. So, relying on the EEO-1 report alone to highlight DEI progress can often run counter to initiatives that have a focus on supporting LGBTQ or non-binary communities, for example.

Another area to watch for is ethnicity. The EEO-1 report tracks seven categories of ethnicity and race:

* Hispanic or Latino
* White
* Black or African American
* Native Hawaiian or Pacific Islander
* Asian
* Native American or Alaska Native
* Two or More Races

However, these broad categories do not accurately reflect large segments of specific ethnic populations such as North Africans, Middle Eastern populations, Caribbean nations, or aboriginal populations. Certainly, these ethnicities should be considered in having a diverse and inclusive workforce, but those who rely solely on the EEO-1 would not have their efforts adequately reflected.

We are not proposing that companies never use EEO-1 reports in disclosures to their stakeholders. To the contrary, companies that make EEO-1 reports publicly available should be commended. However, we strongly encourage CSR and ESG executives to carefully review where this information is published, that the proper context is used, and that a full and complete picture of the diversity of their workforce is presented. Hopefully, the EEO-1 report will be updated in the future to better reflect the more focused ESG and CSR indices of social progress, like the Global Reporting Initiative (GRI) Standards.