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 Market Mysteries of the week

   Are companies following through on their racial equity commitments?   

Answer:

Most companies that made public commitments to improving racial equity have taken some action, but whether that action has translated into meaningful progress is unclear.

Who made serious commitments?

Several of

America's biggest corporations publicly acknowledged systemic racism

in their organizations and communities and

pledged over $50 billion to address racial inequality

through philanthropic grants, investments, and strategic business commitments. Only 10% of the total obligations were purely charitable grants. The biggest recipients of that $4.2 billion were the NAACP, the Equal Justice Initiative, Urban League, and Historically Black Colleges and Universities (HBCUs). The most significant pledges came from Wall Street banks, Walmart, Salesforce, PayPal, Netflix, Facebook, and Alphabet. 

Corporate pledges range from broad expressions of support to focused action.

Criminal justice reform received only a tiny fraction of the donations

, despite the issue's importance to the nationwide protests that motivated these corporate commitments. Microsoft pledged the most of any company toward

criminal justice reform

. Only eight of America's biggest companies - Apple, Microsoft, Amazon, Google, Oracle, Coca-Cola, PepsiCo, and Qualcomm — actually disclosed

direct donations to the Black Lives Matter movement

. 

What progress has been made?

While donations to non-profit organizations have historically been seen as the most effective means for implementing social good, we've

actually seen

the fastest execution from the strategic business commitments

. More than

90% of the corporate pledges came in the form of loans, mortgages, or investments where the corporation stood to profit.

America's biggest bank, JP Morgan Chase, has

already deployed $13 billion of its $30 Billion Racial Equity Commitment

announced in October 2020. The funds have been directed towards expanding homeownership and affordable housing, investing in minority-owned businesses, and increasing access to financial services for Black, Hispanic, and Latino communities.

Bank of America

,

Citigroup

, and

Wells Fargo

have made similar strategic business investments. Companies like Netflix have also directed

more cash to Black-owned banks

to improve access to capital.

Nearly a third of Black neighborhoods in America lack access to banks or credit unions

, compared to only a tenth of White communities. 

How about in the workplace?

While many organizations have made successful outward commitments to improving inequality in America, there is a

growing disconnect between policy changes and tangible action in the workplace

. While more than 80% of human resource professionals report implementing diversity-related training and hiring initiatives,

85% of employees report a lack of meaningful progress in building a more equitable environment for people of color

. Two in five people of color

experienced workplace discrimination

related to their race or ethnicity. 

Two-thirds of all Americans

, and 87% of Black Americans,

believe corporations have more work to do to improve racial equity in the workplace

. Increased diversity is in everyone's best interest. We've

highlighted in past pieces

how

diversity in the workplace can lead to improved employee performance and enhance corporate profitability.

What else can be done to hold corporations accountable?

Transparency is the key.

We need to be able to understand and measure workplace diversity metrics if we hope to improve them.

Nearly half

of America's 1,000 biggest companies

still don't disclose any workforce race and ethnicity data

. Among the top 100 biggest employers in the US,

less than a quarter

disclose any metrics on pay equity by race or ethnicity. 

Last year saw

record-breaking demand from investors for more transparency

into diversity, equity, and inclusion disclosures from companies. McDonald's shareholders just voted in favor of the company

conducting a civil rights audit

.

More accessible racial equity

metrics provide corporations with the tools to implement practical and measurable policies

to improve their workforce. Measurable diversity metrics have enabled companies like

Chipotle

and

Mastercard

to provide additional bonus incentives for managers who achieve diversity targets. 

At Share Scoops, we believe in facilitating an honest conversation between corporations and their stakeholders. With greater corporate transparency and constructive public feedback,

we can build a more inclusive and sustainable economy

.

💙 The Share Scoops Team

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