ELF Beauty Releases New Report Highlighting Impact of Board Diversity

ELF Beauty, in collaboration with North Carolina Agricultural and Technical State University (NC A&T), today released the “Not-So-White Paper,” a report underscoring the impactful role that board diversity plays in the success of US publicly traded companies.

NC A&T is the nation’s largest historically Black college or university (HBCU). With an annual economic impact of $2.4 billion and external research funding of more than $102 million in fiscal year 2024, the university continues to be a driving force for social justice, economic growth and educational excellence. Its Hairston College of Health and Human Sciences and Deese College of Business and Economics contributed to this report.

“Over a decade of research from the commercial sector and academia shows convincingly that diversity in the boardroom can have several positive benefits for a company, including higher return on equity, reduced financial risk, better returns for shareholders and fewer lawsuits,” according to the report. “However, these benefits are not automatic, and they are most likely to occur when there are at least three members of underrepresented communities on a board of directors. This should make sense to board members from their lived experience, as one voice can put an issue on the radar and a second voice can validate it, but it often takes at least three to make a quorum that can change policy.”

Change the Board Game Initiative

The partnership is part of ELF Beauty’s “Change the Board Game” initiative, which is the company’s long-term commitment to increase diverse representation in the boardroom by providing research, advocacy and tools to corporate leaders.

ELF Beauty’s effort to “Change the Board Game” started earlier this year with its purpose partner, Oberland, with an informative campaign about the inequity that still exists on corporate boards, which is misaligned with the US population data in the 2020 Census.

ELF Beauty says it attributes its own success in delivering 22 consecutive quarters of net sales growth is in part drawn to its diverse board. ELF Beauty is the reportedly only publicly traded company in the US out of approximately 4,100 with a board of directors that is 78% women and 44% diverse.

ELF’s mission since its founding 20 years ago champions democratizing access across all pillars of business, including the highest seats of power. Further, ELF Beauty is aiming to close the gap between the board, C-suite and the community.

Recognizing that expanding leadership voices requires the partnership of other companies, ELF says its goal is to help double the rate at which women and people of color are added to the boards of directors of US-based, publicly traded companies by 2027, enabling businesses to benefit from a wide range of perspectives and experiences.

Key Learnings

Key learnings include:

Above-average gender diversity on corporate boards of S&P 500 companies saw 15% return on equity and a 50% reduction in earnings risk measured by EPS over one year;

Women on boards correlate to better price-to-earnings ratios;

Boards with three or more women and/or minorities have a lower likelihood of large-scale discrimination lawsuits.

“Today, more than ever, diversity is essential for strong corporate governance,” said Tarang Amin, chairman and CEO, ELF Beauty. “The research draws real-world correlations that diverse boards are better equipped to navigate complex business environments, foster innovation and deliver value to shareholders. Our own intentional and ongoing journey led us to a Board of Directors that is 78% women and 44% diverse. This stewardship gives us the opportunity to be an agent of positive change.”

The findings of the “Not-So-White Paper” are being presented at the National Association of Corporate Directors (NACD) meeting, where roughly 1,500 executives and board members representing the largest nationwide network of directors will be in attendance.