CFPB outlines D&I best practices

Despite strides sectorwide, financial services firms still have room for improvement when it comes to demonstrating commitment to diversity and inclusion (D&I) programming, policies and practices. Of 270 companies whose public data was analyzed by the Consumer Financial Protection Bureau (CFPB), 44% had no public information about D&I efforts on their websites or in their annual reports, according to a January CFPB report. The report, collated by the agency’s Office of Minority and Women Inclusion, was part of a mandate to develop standards for assessing D&I at CFPB-regulated entities. Broadly, the CFPB concluded that most small organizations lack robust diversity and inclusion programs, while many large organizations have D&I-dedicated infrastructure and resources . The CFPB defined “small” companies as those with fewer than 1,000 employees, and “large” companies as those with more than 5,000 employees. Only 11 of the companies evaluated for the report operated in the auto finance space , but the lessons gleaned from the exercise are valuable to companies across the spectrum. Specifically, the CFPB identified a host of D&I best practices. For starters, companies large and small should ensure that their corporate statement is aligned to meet the needs of their diverse consumer base. The simplest way to implement this enhancement is for companies to review their corporate “About” page through the lens of D&I and modify it accordingly. Next, the CFPB made specific recommendations related to three areas of business: leadership, hiring and suppliers. Though the CFPB delineated its best practices based on company size, companies should look beyond their employee headcounts to continually improve D&I efforts. Avoid thinking, “We’re a small company, so all we need to do is implement baseline D&I procedures.” Just keep tackling the items on the list below, adjusting based on available resources. Leadership Commitment The initial step for indicating D&I commitment from the top down is a leadership statement. This statement sets the tone for employees, job candidates, consumers and vendors, and can be as simple as a public diversity statement endorsed or signed by the CEO or president. Once the leadership statement is in place, companies must demonstrate organizational commitment to diversity. Share more about leadership and values. Develop internal programming — such as diversity councils and committees, employee resource groups, and the like — to encourage dialogue about diversity and inclusion. Companies with greater resources should designate a D&I leader, like a chief diversity officer (CDO), who focuses on organizational diversity. The CDO is tasked with being accountable for compliance, advocacy and education companywide, promoting collaboration across business units. Hiring & Employment Practice On the employment front, the simplest way for companies to get started with D&I is to expand their existing career statement to espouse a value of corporate diversity and a commitment to equal opportunity. This statement goes beyond the standard equal employment opportunity disclosures, perhaps centering on that fact that valuing diverse perspectives creates opportunities for greater innovation and creativity. Recruitment should extend beyond traditional sources. For instance, companies should consider seeking talent at historically Black colleges and universities, Hispanic serving institutions (HSIs), majority Asian and women serving institutions. They could also expand the diversity of their workforce by participating in events geared toward these communities. Beyond recruitment and hiring, companies should work to publish their workforce D&I metrics in annual reports and on their websites. At a minimum, companies can post photos of their leadership and board members on their websites. Workforce development is another important area for organizational success. Help candidates navigate their career paths by highlighting training and development opportunities, along with company-paid certifications and tuition-reimbursement programs. Further, companies can create community partnerships with schools and other organizations to demonstrate organizational commitment to diversity and inclusion. Another opportunity is to design award programs and other recognition for organizational diversity initiatives. Additionally, mentorship programs, leadership development programs and training serve as great recruiting tools for broad diversity. Supplier Selection Again, a statement is the preliminary step for even the smallest companies when it comes to supplier diversity. Crafting a statement to highlight supplier diversity initiatives could provide a huge return on investment for an organization. This statement should express the organization’s commitment to diversifying the company’s suppliers of goods and services and indicate that the company works with small, veteran-owned, minority-owned, women-owned or disability-owned business. Beyond that step, companies could release data related to supplier diversity initiatives, including spending ratios and contract dollars directed toward minority- and women-owned businesses and similar groups. Auto Finance Risk Summit, the premier event for risk and compliance management in auto finance, returns April 25-26 in San Diego. This event is the central resource for education and networking focused on best practices in risk management and will prepare your team for the dynamics of the evolving auto finance market. To learn more about the 2022 event and register, visit www.AutoFinanceRiskSummit.com .

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