Voluntary Diversity and Inclusion Policies and Practices Checklist (16-CU-05)

The NCUA issued a Letter to Credit Unions (16-CU-05) regarding voluntary diversity and inclusion polices.  If you remember, back in June 2015, the banking brotherhood (NCUA, FDIC, ect.) issued final standards for voluntary assessment of diversity policies and practices in regulated entities.  We blogged about it on our SharePoint site and it is reprinted below.

The diversity policies and practices is not a new rule or regulation.  It does not create any legal compliance obligations; implementation or use of the diversity standards is completely voluntary.  NCUA will not incorporate the review of the credit union’s diversity policies and procedures in their examination and supervision program. However, the credit union is encouraged to review the interagency policy statement detailing best practices for advancing workforce and supplier diversity. The Letter reinforces this with “The goal of this voluntary self-assessment is to establish a baseline for evaluating diversity and inclusion in the credit union system. Individual credit union assessment results will not be shared with examiners and will have no bearing on CAMEL ratings. There is no penalty for credit unions that currently have limited or no diversity or inclusion polices in place.”

The Letter includes three enclosures:

The goal of the voluntary self-assessment is to establish a baseline for evaluating diversity and inclusion in the credit union system. It was designed by NCUA as a process credit unions can use to easily share ongoing efforts to increase diversity and create an inclusive environment for both employees and members.

Credit unions, especially ones with at least 100 employees, are encouraged complete the self-assessment and return it to NCUA’s Office of Minority and Women Inclusion between Oct. 1 and Nov. 30.

 

 

Reprint of SharePoint blog:

Rule:

Final Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies

Dates:

End of Comment Period:              08/10/2015

Final Rule Date:                                 06/10/2015

Proposed Rule Date:                      10/25/2013

Summary:

The NCUA, along with the other financial agencies, issued a final interagency policy statement establishing joint standards for assessing the diversity policies and practices of the entities they regulate.  It is important to note that these interagency standards for diversity policies are voluntary.  The NCUA and other financial regulators are issuing this interagency policy statement to comply with Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), which requires financial regulators to develop standards for assessing the diversity policies and practices of the agencies’ regulated entities.

Each agency was required to establish an Office of Minority and Women Inclusion (OMWI), responsible for all diversity matters in management, employment and business activities. The act also instructed that each OMWI director develop standards for assessing diversity policies and practices of the entities regulated by the agencies.  The agencies’ assessments of regulated entities’ diversity policies will not be a part of the examination or supervisory process. Instead, they will rely on a “model assessment” that would include a self-assessment by the entity. Financial institutions’ self-assessment would use the proposed standards, voluntary disclosure of their assessment to their regulator, and publication of their diversity efforts to increase public awareness and understanding.

These standards “provide a framework for regulated entities to create and strengthen their diversity policies and practices—including their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices to promote transparency of organizational diversity and inclusion within the entities’ U.S. operations.”

The interagency policy, which was drafted with an institution of 100 or more employees in mind, lists and explains five detailed standards.  The policy also explains that the unique characteristics of the institution will determine the appropriate application of the standards to that particular institution.  The standards that are discussed include:

  1. Organizational Commitment to Diversity and Inclusion
  2. Workforce Profile and Employment Practices
  3. Procurement and Business Practices—Supplier Diversity
  4. Practices to Promote Transparency of Organizational Diversity and Inclusion, and
  5. Entities’ Self-Assessment

The NCUA “will not use their examination or supervisory processes in connection with these Standards.”  The Dodd-Frank Act does NOT grant NCUA enforcement power to require credit unions to self-assess or implement these diversity standards.  Instead, these standards are only best practices, and the NCUA “encourage[s] each entity to use these Standards in a manner appropriate to its unique characteristics.”

The NCUA will conduct an assessment to determine the extent of the diversity and inclusion efforts by all credit unions. 

Recommended Actions:

The agencies are asking for public comments on the information collection aspect of the final joint standards. 

The policy statement is not a new rule or regulation.  It does not create any legal compliance obligations; implementation or use of the diversity standards is completely voluntary.  NCUA will not incorporate the review of the credit union’s diversity policies and procedures in their examination and supervision program. 

However, the credit union is encouraged to review the interagency policy statement detailing best practices for advancing workforce and supplier diversity.

Each year the credit union will have an opportunity to conduct a voluntary self-assessment of the credit union’s diversity initiatives (attached below). 

Detailed Analysis:

For purposes of this Policy:

  • Diversity refers to minorities as defined in the Dodd-Frank Act – Black Americans, Native Americans, Hispanic Americans, Asian Americans and women.
  • Inclusion is defined as a process to create and maintain a positive work environment that values individual similarities and differences, so that all can reach their potential and maximize their contributions to an organization. 

The Standards provide a framework for an entity to create and strengthen its diversity policies and practices, including its organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices to promote transparency of organizational diversity and inclusion.  Entities should use these Standards in a manner appropriate to its unique characteristics. 

(1) Organizational Commitment to Diversity and Inclusion

The leadership of an organization with successful diversity policies and practices demonstrates its commitment to diversity and inclusion. Leadership comes from the governing body, such as a board of directors, as well as senior officials and those managing the organization on a day-to-day basis. These Standards inform how an entity promotes diversity and inclusion in both employment and contracting and how it fosters a corporate culture that embraces diversity and inclusion.

Standards

In a manner reflective of the individual entity’s size and other characteristics,

  • The entity includes diversity and inclusion considerations in both employment and contracting as an important part of its strategic plan for recruiting, hiring, retention, and promotion.
  • The entity has a diversity and inclusion policy that is approved and supported by senior leadership, including senior management and the board of directors.
  • The entity provides regular progress reports to the board and senior management.
  • The entity regularly conducts training and provides educational opportunities on equal employment opportunity and on diversity and inclusion.
  • The entity has a senior level official, preferably with knowledge of and experience in diversity and inclusion policies and practices, who oversees and directs the entity’s diversity and inclusion efforts. For example, this official may be an executive-level Diversity Officer (or equivalent position) with dedicated resources to support diversity strategies and initiatives.
  • The entity takes proactive steps to promote a diverse pool of candidates, including women and minorities, in its hiring, recruiting, retention, and promotion, as well as in its selection of board members, senior management, and other senior leadership positions.

(2) Workforce Profile and Employment Practices

Many entities promote the fair inclusion of minorities and women in their workforce by publicizing employment opportunities, creating relationships with minority and women professional organizations and educational institutions, creating a culture that values the contribution of all employees, and encouraging a focus on these objectives when evaluating the performance of managers. Entities with successful diversity and inclusion programs also regularly evaluate their programs and identify areas to be improved.

Entities use various analytical tools to evaluate a wide range of business objectives, including metrics to track and measure the inclusiveness of their workforce (e.g., race, ethnicity, and gender). Entities that are subject to the recordkeeping and reporting requirements of the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs currently collect and maintain data and supporting documentation that may assist in evaluating and assessing their policies and practices related to workforce diversity and inclusion. Specifically, entities that file EEO-1 Reports [9]  required under Title VII of the Civil Rights Act of 1964 routinely track and analyze employment statistics by gender, race, ethnicity, and occupational group. Entities that develop and implement the affirmative action programs required under the regulations implementing Executive Order 11246 track and analyze employer-created job groups. Entities also are encouraged to use other analytical tools that they may find helpful.

Standards

In a manner reflective of the individual entity’s size and other characteristics,

  • The entity implements policies and practices related to workforce diversity and inclusion in a manner that complies with all applicable laws.
  • The entity ensures equal employment opportunities for all employees and applicants for employment and does not engage in unlawful employment discrimination based on gender, race, or ethnicity.
  • The entity has policies and practices that create diverse applicant pools for both internal and external opportunities that may include:
    • Outreach to minority and women organizations;
    • Outreach to educational institutions serving significant minority and women student populations; and
    • Participation in conferences, workshops, and other events to attract minorities and women and to inform them of employment and promotion opportunities.
  • The entity utilizes both quantitative and qualitative measurements to assess its workforce diversity and inclusion efforts. These efforts may be reflected, for example, in applicant tracking, hiring, promotions, separations (voluntary and involuntary), career development, and retention across all levels and occupations of the entity, including the executive and managerial ranks.
  • The entity holds management at all levels accountable for diversity and inclusion efforts, for example by ensuring that such efforts align with business strategies and individual performance plans.

(3) Procurement and Business Practices—Supplier Diversity

Companies increasingly understand the competitive advantage of having a broad selection of available suppliers to choose from with respect to factors such as price, quality, attention to detail, and future relationship building. A number of entities have achieved success at expanding available business options by increasing outreach to minority-owned and women-owned businesses.

As in the employment context, entities often use metrics to identify the baseline of how much they spend procuring and contracting for goods and services, how much they spend with minority-owned and women-owned businesses, and the availability of relevant minority-owned and women-owned businesses, as well as changes over time. Similarly, entities may use outreach to inform minority-owned and women-owned businesses (and affinity groups representing these constituencies) of these opportunities and of the procurement process.

In addition, entities’ prime contractors often use subcontractors to fulfill the obligations of various contracts. The use of minority-owned and women-owned businesses as subcontractors provides valuable opportunities for both the minority-owned and women-owned businesses and the prime contractor. Entities may encourage the use of minority-owned and women-owned subcontractors by incorporating this objective in their business contracts.

Standards

In a manner reflective of the individual entity’s size and other characteristics,

  • The entity has a supplier diversity policy that provides for a fair opportunity for minority-owned and women-owned businesses to compete for procurement of business goods and services. This includes contracts of all types, including contracts for the issuance or guarantee of any debt, equity, or security, the sale of assets, the management of the entity’s assets, and the development of the entity’s equity investments.
  • The entity has methods to evaluate its supplier diversity, which may include metrics and analytics related to:
    • Annual procurement spending;
    • Percentage of contract dollars awarded to minority-owned and women-owned business contractors by race, ethnicity, and gender; and
    • Percentage of contracts with minority-owned and women-owned business sub-contractors.
  • The entity has practices to promote a diverse supplier pool, which may include:
    • Outreach to minority-owned and women-owned contractors and representative organizations;
    • Participation in conferences, workshops, and other events to attract minority-owned and women-owned firms and inform them of contracting opportunities; and
    • An ongoing process to publicize its procurement opportunities.

(4) Practices To Promote Transparency of Organizational Diversity and Inclusion

Transparency and publicity are important aspects of assessing diversity policies and practices. Greater awareness and transparency give the public information to assess those policies and practices. Entities publicize information about their diversity and inclusion efforts through normal business methods, which include displaying information on their Web sites, in their promotional materials, and in their annual reports to shareholders, if applicable. By making public an entity’s commitment to diversity and inclusion, its plans for achieving diversity and inclusion, and the metrics it uses to measure success in both workplace and supplier diversity, an entity informs a broad constituency of investors, employees, potential employees, suppliers, customers, and the general community about its efforts. The publication of this information can make new markets accessible for minorities and women and illustrate the progress made toward an important business goal.

Standards

In a manner reflective of the individual entity’s size and other characteristics, the entity is transparent with respect to its diversity and inclusion activities by making the following information available to the public annually through its Web site or other appropriate communication methods:

  • The entity’s diversity and inclusion strategic plan;
  • The entity’s policy on its commitment to diversity and inclusion;
  • The entity’s progress toward achieving diversity and inclusion in its workforce and procurement activities (which may include the entity’s current workforce and supplier demographic profiles); and
  • Opportunities available at the entity that promote diversity, which may include:
    • Current employment and procurement opportunities;
    • Forecasts of potential employment and procurement opportunities; and
    • The availability and use of mentorship and developmental programs for employees and contractors.

(5) Entities’ Self-Assessment

The Agencies interpret the term “assessment” to mean self-assessment. Entities that have successful diversity policies and practices allocate time and resources to monitoring and evaluating performance under their diversity policies and practices on an ongoing basis. Entities are encouraged to disclose their diversity policies and practices, as well as information related to their assessments, to the Agencies and the public. Entities submitting information may designate such information as confidential commercial information as appropriate, and the Agencies will follow the Freedom of Information Act in the event of requests for particular submissions.

Standards

In a manner reflective of the individual entity’s size and other characteristics,

  • The entity uses the Standards to conduct self-assessments of its diversity policies and practices annually.
  • The entity monitors and evaluates its performance under its diversity policies and practices on an ongoing basis.
  • The entity provides information pertaining to the self-assessments of its diversity policies and practices to the OMWI Director of its primary federal financial regulator.
  • The entity publishes information pertaining to its efforts with respect to the Standards.

 

https://www.federalregister.gov/articles/2015/06/10/2015-14126/final-interagency-policy-statement-establishing-joint-standards-for-assessing-the-diversity-policies#h-27

http://www.ncua.gov/News/Pages/NW20150609FinalStandards.aspx

http://www.ncua.gov/Resources/CUs/Pages/LCU2015-05.aspx

http://www.ncua.gov/Resources/Documents/LCU2015-05-CU-Assessment-Checklist.pdf

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