Dive Brief:

• In the first environmental, social and governance report from Discover Financial Services, the credit card issuer said it spent $103 million last year with businesses owned by women, people of color, veterans, people with disabilities and LGBTQ+ entrepreneurs, a 27% jump from 2021.
• The Riverwoods, Illinois-based company aims to spend $125 million annually with businesses owned by diverse entrepreneurs by 2025, more than double what it spent in 2020, according to the report released Wednesday.
• Less than one-third of Discover’s board directors are women, while half of its board committees are led by women, according to the report.

Dive Insight:

In the report, which reviewed the company’s progress as of the end of last year, Discover said it set its diversity goals in accordance with the U.S. labor market data. When comparing itself against that metric, the company has sought to increase its representation of women and people of color, particularly among Black and Hispanic employees. 

“The release of our first ESG report is a significant milestone for us at Discover and communicating our ESG efforts transparently is a priority,” Matt Johanson, chief ESG officer and senior vice president of social impact at Discover, said in a statement. “The activities highlighted in this report allow us to fully deliver on our mission to help people have brighter financial futures.”

The company said in the report that 36% of its executive officers are women, 30% are people of color and 9% are women of color while on the next management level down, 46% of directors are women, 28% are people of color and 13% are women of color. Across all management levels by 2025, Discover aims to increase the percentage of women to 50%, the share of people of color to 40%, and representation of Black and Hispanic people to 15%. 

As Discover pursues its ESG goals, the company recently tapped a C-suite leader to bolster that effort. In December, Discover appointed Hope Mehlman to be its chief legal officer and general counsel. The company highlighted Mehlman’s expertise in the environmental, social and governance arena.

Besides Discover, other payment companies have also amplified their ESG efforts. The card network company Mastercard has set a goal of bringing 1 billion unbanked or underbanked consumers, 50 million micro and small businesses and 25 million women-run companies globally into the financial system by 2025.

Meanwhile, card rival Synchrony teamed up with an investment fund run by Ariel Alternatives earlier this year to invest $100 million into Black and Latinx entrepreneurs.

As payment companies seek to diversify their workforces and pour capital into startups run by underrepresented entrepreneurs, members of Congress have raised questions about the lack of diversity in the payments industry. Last June, the House Committee on Financial Services held a hearing titled “Combating Tech Bro Culture: Understanding Obstacles to Investments in Diverse-Owned Fintechs.”

Rep. Stephen Lynch (D-MA) expressed support for addressing the issue with new policy directives, such as introducing new reporting requirements or tasking the Securities and Exchange Commission with developing a scorecard that would push venture capitalists to abandon the “old boys club culture.”