Companies in 2021 increased gender and minority representation among their finance chiefs at the highest rate yet, but the bar is still set fairly low. With ESG factors a major focus for shareholders and a key issue discussed in most board meetings these days, diversity and inclusion are expected to continue growing within companies, both at the top and throughout the employee base.

The S&P 500 companies employed 20 Black chief financial officers in 2021, up from 12 in 2020, and representing 2.9% of all sitting CFOs, reports the Wall Street Journal. Female representation was higher, at 15.1% of all CFOs employed in 2021 being women compared to 12.6% in 2020.

“More companies should be intentional about having a diverse perspective within the executive team and creating an atmosphere where everyone has the opportunity to contribute results,” said Deidra Merriwether, Grainger’s CFO.

As board positions continue to grow more diverse, a greater push for diversity amongst c-level positions is being made. Josh Crist, co-managing partner of Crist Kolder, believes that it’s going to result in an exponential rise in the hiring of female and Black CFOs over the coming 12–18 months. Executives of diverse backgrounds often bring strengths to their organizations and skills that greatly benefit the company they work for.

“They’re very progressive thinkers, to the point where the business will listen to them,” Crist said.

Supporting Diverse Leadership With SHE

State Street Global Investors recognizes the importance of investing in a future that is more female by supporting companies that are practicing gender equity today. The SPDR SSGA Gender Diversity Index ETF (SHE) offers data-driven exposure to companies with the highest gender diversity amongst leadership positions within their industries.

SHE follows the SSGA Gender Diversity Index, an index that tracks large-cap U.S. companies exhibiting gender diversity within their senior leadership.

The benchmark pulls from the top 1,000 U.S. stocks by market capitalization, utilizing three different gender diversity screens to narrow down its selection universe.

These metrics include the ratio of female executives and female board of director members to all executives and all board of director members, the ratio of female executives to all executives, and the ratio of female executives (excluding those on the board of directors) to the number of executives in total (again, excluding board members).

For the purposes of the index, “executives” are defined as any position of vice president or higher in a company, or a position of managing director and above in a financial sector company.

According to their free-float market caps, the top-ranking 10% of companies within each sector are selected and weighted proportionally. Each stock has a maximum weight cap of 5%.

The top three sectors in SHE include information technology at 28.36%, healthcare at 14.13%, and consumer discretionary at 11.32%.

SHE carries an expense ratio of 0.20%.

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