Three Questions CFOs ask about Diversity, Equity and Inclusion

A growing body of research links organizational investments in diversity, equity and inclusion (DEI) capabilities to quantifiable performance benefits.

Late last year, my colleague and Vertex Senior Director of IT Robin Allen reported on “eye-opening metrics – hard numbers related to the performance of teams, turnover, recruiting and more – that underscore the link between DEI enhancements and bottom-line improvements.” 

Not surprisingly, CFOs are interested in these correlations, too. A Deloitte paper – cleverly titled “Seize the DEI” – examines “how CFOs can help implement strategies around diversity, equity and inclusion.” The report presents new survey research showing that 72% of companies have formal DEI programs in place. The paper also cites a Wall Street Journal analysis showing that the S&P 500’s most diverse companies posted an annual stock return (during a five-year stretch) that is more than twice as high as less diverse companies listed on the index for that period.

Deloitte identifies three questions that CFOs should ask about their organization’s DEI investments that tax leaders should consider: 

1. Is DEI part of our criteria for choosing partners? “Given their oversight of treasury and tax, CFOs have great insight into the broader ecosystem,” according to Deloitte, which suggests that “companies that nurture diversity may be more valuable business partners, providing input that helps the business sharpen its competitive advantage.”
2. Are we doing all we can to promote diversity within our supplier base? This question is a good match for larger companies with more advanced DEI programs in place. Many of these lessons can also apply to small to medium businesses and can be shared throughout the supplier base. (This question can also be discussed with procurement teams to help them understand the extent to which DEI issues affect their sourcing decisions.) 
3. Are we providing fully detailed diversity data? The reach of this question will broaden as human capital and DEI reporting matures, and tax groups should be prepared to address it. 

More tax leaders will be called on to answer these questions and similar queries as DEI programs advance. As they do, they should keep in mind Robin’s point that “Organizations are increasingly taking tangible actions to cultivate genuinely diverse, equitable and inclusive workplace cultures. These actions have quantifiable links to performance benefits.”

(Robin has also discussed, in this Tax Matters podcast, how the technology profession can address some unique DEI challenges.)