Last week the FDIC issued FIL 35-2023 encouraging FDIC-supervised financial institutions to voluntarily conduct and submit self-assessments of their diversity policies and practices by September 30, 2023 in accordance with Section 342 of the Dodd-Frank Act. According to the FIL, the self-assessment is not an examination requirement and results are not shared with examiners. The results of diversity policies and practices self-assessments have no impact on an institution’s safety and soundness or consumer compliance ratings, or Community Reinvestment Act (CRA) performance evaluation.
Pursuant to Section 342 of Dodd-Frank the FDIC gathers and analyzes diversity self-assessment information based on published Interagency Standards. These standards provide a framework to create diversity policies and practices. The agencies recognize that an institution’s size, location, and structure makes it unique, and when drafting these standards, the agencies focused primarily on institutions with more than 100 employees. The agencies acknowledge that smaller institutions or those located in remote areas face different challenges and have different options available to them compared to their larger or more urban counterparts. The interagency standards focus attention to five areas:
(1) Organizational Commitment to Diversity and Inclusion standards: Policies and practices should demonstrate an institution’s commitment to diversity and inclusion. Standards should promote diversity and inclusion in employment and foster a corporate culture that embraces diversity and inclusion.
(2) Workforce Profile and Employment Practices standards: Many 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.
(3) Procurement and Business Practices—Supplier Diversity standards: Institutions 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. Many have achieved success at expanding available business options by increasing outreach to minority-owned and women-owned businesses.
(4) Practices to Promote Transparency of Organizational Diversity and Inclusion standards: Greater awareness and transparency give the public information to assess those policies and practices. Institutions publicize diversity and inclusion information through normal business methods – its own website, marketing materials, and annual reports to shareholders, if applicable. Public commitment to diversity and inclusion helps keep the general community informed about the institution and its efforts.
(5) Entities’ Self-Assessment standards: Institutions 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. The FDIC encourages institutions to disclose their diversity policies and practices, as well as information related to their assessments, to the FDIC and the public.
The diversity self-assessment form is accessible online through the secure FDIC connect portal. If you need to obtain access to the portal, contact your institution’s FDIC portal coordinator, and if you do not know who that is, you can email [email protected] or call the FDIC helpdesk at 703-516-1069 to find out. Should you have any questions about this FIL or diversity policies or practices, feel free to reach out to us on the hotline.