In May 2020, the world witnessed the horrific death of George Floyd, prompting Americans to confront the racial injustice experienced daily by Black Americans. This event forced a reassessment of our most fundamental beliefs and institutions and became a catalyst for change. as you sow, the nation’s leading nonprofit on shareholder advocacy, created the Racial Justice Initiative to hold corporations accountable for racial justice statements issued in response to the murder of George Floyd and the national uprising demanding the eradication of the systemic racism. Public corporate statements of support for black communities were released quickly, some as vague and evasive as the corporate actions that followed. Other companies have expressed a deep commitment to sustained efforts to eliminate systemic racism and are actively working to promote racial justice. The goal of the Initiative is to monitor these corporate responses and follow up with businesses to ensure that statements of support for racial justice translate into concrete actions that genuinely promote equity, helping them thus on the path to ending corporate complicity in systemic racism.
Corporate Commitment to Racial Equity and Diversity, Equity and Inclusion
There is growing recognition that systemic racism is the underlying cause of discrimination and injustice, and that corporations are complicit in perpetuating systemic racism. Despite the well-documented material benefits companies derive from diversification, companies have been slow to realize the critical role they play in perpetuating systemic racism. The first steps have been taken by many companies by acknowledging the inequalities that exist and expressing a desire for change. Our role, as shareholder advocates, is to educate companies so they can examine the implicit biases built into their systems. The Racial Justice Initiative helps companies adopt an anti-racism lens to improve their business models and create a direct positive impact on the lives of all stakeholders.
Since 2020, the Racial Justice Initiative has developed Racial Justice Dashboards on the Russell 1000, which track publicly available information on key actions related to disclosure and policies on racial equity, diversity, Equity and Inclusion (DEI), and Environmental Justice. We update our data quarterly, giving the companies we work with the opportunity to improve throughout the year. We conduct our annual in-depth search from May to September. Our dashboards serve as educational tools, guidelines to help a variety of stakeholders understand and assess the company’s progress on racial equity.
The Racial Justice Initiative directly engages public companies on their racial equity and DEI policies and practices. We use our dashboards as the backbone of our corporate engagement strategy and use our Key Performance Indicators (KPIs) as assessment guidelines to track and monitor business progress. Our Racial Justice Dashboards have been used to create standards for investors, companies And stakeholders acting responsibly for racial equity.
Racial Justice/Human Rights Proposals 2023
Source: Human rights | Proxy Overview
“Audits: Half of the 24 pending proposals asking for civil rights or racial justice audits are new submissions that received high votes in 2022. The proposals use similar wording across a wide variety of companies. For the third consecutive year, they highlight the commitments of public companies that face persistent inequalities, including a deep underrepresentation of people of color and the negative and differential impacts of company activities in and on communities of color. , how and to whom companies provide goods and services or under-representation in higher-level jobs. Proponents argue that tackling systemic racism will allow businesses to run better and be fairer. Some cite findings from as you sow Racial Justice Dashboard. The proposals also name specific stakeholder groups to be consulted and all are seeking external expertise and advice.
Introduction to the Workplace Equity Program
Discrimination at work is pervasive. Although Title VII of the Civil Rights Act of 1964 prohibits harassment or discrimination in the workplace, 48% of African Americans and 36% of Hispanics have experienced racial discrimination in the workplace. In addition, 55% of female managers say they have been sexually harassed during their career.
Consulting firm McKinsey found that in 2018, white women made up 31% of entry-level employees, but only 19% of the executive suite. Men of color made up 16% of entry-level employees, but only 9% of the executive suite. Most glaringly, women of color made up 17% of entry-level employees, but only 4% of the executive suite.
The issue of diversity, equity and inclusion in the workplace has a direct material impact on investors, as research shows financial returns correlated with strong diversity and inclusion programs. In addition to the profound societal damage caused by an economically unjust system, allowing biased and discriminatory employment practices to persist also harms the long-term health of businesses. Below is a small sample of available studies:
as you sowin its 2022 review of 277 EEO-1 reports, which detail the composition of a company’s workforce, found a positive association between diversity in management and cash flow, net profit, income and return on equity.
Credit Suisse, in a study of more than 3,000 companies, found that companies with more than 20% of management by women experienced larger share price increases over the past decade than companies. companies where women are less represented in management positions.
A McKinsey study found that companies in the top quartile for gender diversity in corporate leadership had a 21% chance of outperforming their bottom quartile counterparts in profitability.
Similarly, racial and ethnic diversity leaders were 33% more likely to outperform their peers in profitability.
A 2019 study of the S&P500 by The Wall Street Journal found that the 20 most diversified companies had a five-year average annual stock market return 5.8% higher than the 20 least diversified companies. Benefits associated with team diversity include: access to top talent, better understanding of consumer preferences, better mix of leadership skills, informed strategic discussions and better risk management. The diversity and different perspectives it fosters have also been shown to encourage more creative and innovative work environments.
Benefits associated with team diversity include: access to top talent, better understanding of consumer preferences, better mix of leadership skills, informed strategic discussions and better risk management. The diversity and different perspectives it fosters have also been shown to encourage more creative and innovative work environments.
This initiative is based on the need for meaningful corporate disclosure on the effectiveness of workplace equity programs. Unfortunately, when we launched this program, current company disclosures about diversity, equity and inclusion (DEI) programs in the workplace were mostly anecdotal and qualitative. Providing selective data provides information that is difficult to use, which is equivalent to providing income without spending. Investors need complete and consistent data sets. Without data, external stakeholders cannot know the effectiveness of popular programs, such as employee resource groups, engagement surveys, and bias trainings. Without companies disclosing key diversity and inclusion metrics, investors are unable to identify which companies are “speaking up” and which have strong public relations teams.
1Title VII of the Civil Rights Act of 1964 prohibits “discrimination against any person, with respect to pay, conditions, or privileges of employment, because of race, color, religion, gender or national origin”. https://www.eeoc.gov/laws/statutes/titlevii.cfm(flip)