Corporate America, If You Want to Honor Your Commitment to Racial Equity, Now Is the Time to Embrace Transparency
The weight of the racial and social justice reckoning of last summer still sits with us, especially in light of everything happening in Minneapolis. It’s just one reminder of how, despite the way the past year has been a sea change for the way millions of Americans think about race, we still face fundamentally broken aspects of our society.
Also this week, hundreds of corporate executives signed an open letter opposing “discriminatory legislation” that would make it more difficult to vote, which advocates note are aimed at disproportionately Black voters.
Our work at JUST Capital is focused on the role that corporations play in building a more just economy, and our survey research has made it clear that the American public believes corporations play a defining role in shaping our society, and that’s across demographics. 70% of Americans believe corporate leaders should take a stand on important social issues like addressing systemic inequality, and protecting our democratic process.
“We are a part of society as businesses,” Dawn Jones, Intel’s Chief Diversity & Inclusion Officer, told JUST. “We employ thousands of people who go out into these communities and their families are impacted by some of the things that are happening. And when your family is impacted, you bring that with you to work and that impacts your ability to perform. So it is all interconnected.”
It is an important moment and one that we can’t let pass. That’s why we have launched the Corporate Racial Equity Tracker as a means of accountability.
The Tracker is meant to not only fill a gap in existing research around corporate stakeholder performance, but also incentivize increased disclosure and encourage companies to take meaningful steps in advancing racial equity across its stakeholders. It details disclosures from the 100 largest public American companies, by workforce size, on their racial equity commitments and actions across six dimensions: pay equity, racial/ethnic diversity data, education and training programs, response to mass incarceration, community investments, and anti-discrimination policies.
Over the past year, it has become undeniable that the general public, customers, investors, and the media want to know if companies are walking the talk. And employees are asking companies to do more and be more transparent.
In a recent survey we conducted with The Harris Poll, Americans, especially Black Americans, agree that it is imperative that companies advance racial equity in the workplace. Ninety-five percent of Black Americans agree that it’s important for companies to promote racial equity, and over 70% have expressed that it is important to institute a range of corporate diversity, equity, and inclusion policies and actions, yet 80% say companies have more work to do.
These are issues that impact every aspect of an organization, from the board and CEO to frontline workers. As one Black man in his 50s told us in a focus group, “It affects me when I see the way these large companies hire. I want to see ‘someone like me’ in managerial and board positions.”
The Imperative of Disclosure
Our Tracker is a first step in assessing the state of where America’s largest companies stand on the diversity, equity, and inclusion issues Americans care about. And what the data reveals is that while large companies are highly likely to disclose baseline DEI commitments, they are much less likely to report on their actions related to addressing the state of their actual performance.
Of the 100 largest companies we analyzed all of them disclose having at least one policy to protect staff from discrimination based on personal characteristics; 98% disclose investing in at least one type of education and training opportunities for their workers; and 91% disclose having at least one policy to support their local communities by sourcing products or services from minority-owned businesses or by donating to local schools or scholarship programs.
While these are important, only 37% are transparent about the racial/ethnic diversity data of both their workforces and Boards; 31% report conducting a pay equity analysis to ensure equitable pay practices along racial and ethnic lines; 29% disclose measurable targets to increase diversity and equal opportunity; and just 9% have a re-entry program to reduce barriers to hiring formerly incarcerated people
According to a recent McKinsey and PolicyLink report, Black workers tend to be in the industries with the largest frontline labor forces, and three in five Black workers are employed in frontline jobs such as service workers, laborers, operatives, and office and clerical workers.
So when our data shows us that only 31% of the 100 largest companies report conducting a pay equity analysis to ensure equitable pay practices along racial and ethnic lines, it elicits a call to action to raise wages. In a June 2020 poll, we asked the American public what they wanted companies to do to advance racial equity, and 89% of Black respondents say that companies should pay employees a living wage. If companies are truly committed to advancing racial equity, they must support economic advancement for what the public has deemed their most important stakeholder group, workers.
What We’re Building Toward
We recognize this Tracker doesn’t yet answer all the questions we hope to hear from corporate America, but we believe that it will become an even more powerful tool as we integrate more sophisticated accountability measures in the months and years ahead.
Last July, we collaborated with PolicyLink and FSG to create a CEO Blueprint for Racial Equity. In it, we outline important actions that companies can take to advance racial equity such as: designing products and services that center racially equitable outcomes; supporting environmental justice; advocating for local policies that address structural inequities; investing in communities through community development financial institutions (CDFIs) and minority depository institutions (MDIs); and using corporate lobbying infrastructure to reduce racialized inequality conditions for communities of color (i.e. supporting policies for ensuring voting access).
We also understand the importance of tying executive pay to progress and performance in meeting diversity and inclusion goals. We heard this loud and clear in our polling last summer, when 87% of Black respondents agreed that it is an important action for corporate America to prioritize.
We plan on including issues like those mentioned above in future versions of the Tracker to ensure that we’re representing a broader picture of how companies are advancing racial equity.
In that McKinsey/PolicyLink report mentioned earlier, researchers found that if we continue on the current trajectory, it will take about 95 years for Black employees to reach talent parity (or 12% representation) across all levels in the private sector. There is just too much at stake to let this moment pass without acknowledging and then working to change the structural inequities that have plagued Black and brown Americans for decades.
We’re not alone in being hopeful. “Why I think this is different is the discussion has shifted from ’if’ and ‘when’ to ‘how,’” Damon Jones, P&G’s Chief Communications Officer and head of its advocacy work, told JUST. He said he has found linked benefits to society and business in this work to be undeniable.
We are acutely aware that if we are not using the collective power of data and analysis, listening to the American public, partnering with equity advocates, leveraging the influence of investors, and working with business leaders who are passionately committed to addressing systemic inequities, then nothing will change.
While there is currently no North Star when it comes to advancing racial equity in American business, JUST’s Corporate Racial Equity Tracker is a tool we can use to incentivize action and drive disclosure. Its launch is part of a broader, multi-year strategy to help companies meet the expectations of the public. As we move forward with this work, we are conscious of the ways that companies’ transparency around actions, not general commitments, are going to be to truly advance equity within their organizations, the communities they operate in, and in the economy.