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Freshfields Sustainability

| 8 minutes read

Business as unusual: What role should business play in the battle for racial justice and equality?

“My advice to [CEOs] is to throw out the old playbook…More is going to be demanded of corporations, and more should be demanded, because they have a tremendous influence on how we live our lives.”  Darren Walker, President of the Ford Foundation

Following our last blog on the disparate impact of Covid-19 on black people and ethnic minorities, racial equality has landed like a bang on the conference room tables of corporations around the world.  Protests around the killings of George Floyd, Ahmaud Aubrey, Breonna Taylor and other black Americans by law enforcement have compelled business leaders to speak out. Many quickly issued public statements expressing their shock and sorrow as well as pledged corporate support toward the fight for racial justice and equality. 

The responses come from companies who may have made missteps in the past in addressing racial justice and demonstrate a mix of the old playbook (donate and commiserate), as well as novel approaches that could lead to meaningful impact and systemic change. 

This blog explores those companies that are boldly placing racial equality now at the top of their sustainability priorities. Most statements respond to the urgent calls of the Black Lives Matter movement but many also acknowledge the pain and racism inflicted on indigenous people and other people of color.

Public Statements

The most effective strategies have used a mix of (1) the power of the pulpit, (2) the power of the purse, (3) the power of people and (4) the power of performance.

Power of the Pulpit

The “bully pulpit” is usually associated with politicians for their mastery at seizing the spotlight.  But the voice of politicians is a mere whisper against the megaphone of multi-billion-dollar business campaigns to promote brands and messages through advertisements, celebrities and influencers.  

Business leaders understand this power, and some have chosen this moment to use their pulpit to preach racial justice and equality.  For example, Netflix tweeted:  “To be silent is to be complicit.  Black lives matter.  We have a platform, and we have a duty to our Black members, employees, creators and talent to speak up.” Similarly, Amazon tweeted, “The inequitable and brutal treatment of Black people in our country must stop.” 

The bully pulpit has limitations and risks.  It may serve to change some hearts and minds, but it also may strike the wrong tone or come across as profiteering from misfortune.  Further, the preaching may only be to the converted and not those who need racial enlightenment the most. This is not to say the pulpit is not powerful as a uniting and enabling force, but it will not get the job done in isolation. 

Several companies have shifted the equity balance of their platform to instead limit access to negative voices and empower those of communities of color.  For example, Snapchat stated that it would not allow their platforms to “amplify voices who incite racial violence and injustice” in announcing their decision to no longer promote President Trump’s content. Similarly, Facebook announced it would examine how the company treats content by amending their policy to allow discussion and content of excessive use of police and the use of state force when a country has ongoing civil unrest. 

In an even more direct passing of the power of the pulpit to black voices, other companies are pledging to share their own platforms for greater access to black and other racial justice organizations. Google’s parent Alphabet pledged $25 million in ad grants to organizations fighting racial justice. Comcast, as well, pledged $75 million in cash and $25 million in media to be distributed over the next three years to “fight injustice and inequality.”     

Power of the Purse

The most prominent feature of recent corporate statements has been the dollar amounts being pledged.  These amounts have topped seven, eight and nine figures.  Most pledges have been donations to civil rights organizations to continue their fight on the front lines for equal justice, housing, education and employment.  Companies like Amazon, Cisco and Facebook  have pledged donations of $5-10 million to such leading civil rights organizations as the NAACP Legal Defense Fund, the Brennan Center for Justice and the Equal Justice Initiative. 

This corporate strategy puts the money directly in the hands of those who have the skills, energy and capacity to attack the problem.  An important commitment to community advancement but certainly one squarely in the old playbook.

Some companies have structured their financial commitment by deploying their own financial acumen to directly address systemic issues around lack of financial equity and power in the black community.  As large as the donation pledges may be, they are dwarfed by the billion-dollar procurement budgets of large corporations.  Increasing that spend by even a few percentage points to businesses owned by people of color is a game changer.

Apple, as part of a $100 million racial equity fund, pledged to increase spending on black owned suppliers – a group that we know has been hit hard during the Covid-19 crisis. Similarly, PayPal pledged $530 million to support black owned businesses. Softbank, as well, declared it would deploy their venture capital expertise by establishing a $100 million Opportunity Fund to invest only in companies led by people of color – and the fund, itself, would be led by black leaders from the tech world.

Finally, in contrast to the 2008 crisis, Bank of America pledged to donate an inspiring $1 billion over 4 years to strengthen economic opportunity in communities of color that have been hit the hardest by Covid-19, through donations to multiple small businesses and communities.  The bank has had a troubled relationship with the black community, including being fined by the US Department of Labor for $2.2 million in 2013 for discriminatory practices against black job candidates over two decades.

Power of People

Perhaps the greatest direct impact a business will have on racial equality is its role as an employer. McKinsey found that black employees are under-represented in white collar jobs and currently hold positions that are more vulnerable to the economic fallout of the coronavirus. The lack of representation of black executives is even more acute in senior positions. The Center for Talent Innovation found that although black people comprise 12% of the population, they hold less than 3.2% of senior titles at large corporations and less than 0.8% of the CEO positions of Fortune 500 companies. Many leading companies either had zero black executives or only one with the title of Chief Diversity Officer.

The old playbook has been to call internal meetings to allow black employees to air grievances and perhaps hire an outside diversity consultant to facilitate a conversation on recruitment and retention.  And when progress remained stubbornly slow (or non-existent), to sigh that “these things take time”.     

Mellody Hobson, Co-CEO of Ariel Investments, provided perhaps the best response to this old saw of diversity as a work-in-progress: “Saying you’re working on diversity is not acceptable. You don’t work on anything in corporate America. You either do, or do not.” 

Getting it done has become the new rallying cry for several businesses by pledging to increase the number of black employees in general and at senior positions as well as by establishing radically inclusive environments.    

Adidas stepped up and shrugged off the taboos around numerical targets and pledged that 30% of new positions in the US would be filled with Black or Latinx workers.

Former CEO of Xerox and VEON CEO Ursula Burns said in a recent interview that representation at the Board level is essential to a real shift in power. “Before you even look at the companies, look at the boards.  Most of the boards still have zero or one African American on board… pressure in that area can help to speed up progress and transitions for companies.” Alexis Ohanian, co-founder of Reddit, acted swiftly to show his support for that approach and resigned from the board of Reddit and urged the company to replace him with a black candidate. The company immediately appointed a leading black venture capitalist, Michael Seibel. 

The power of diverse voices is of course not just a numbers game. Many corporates have pledged to create radically inclusive environments that both address unconscious biases and white privilege but also celebrate and empower diverse voices. TikTok, who came into even greater prominence during the pandemic lockdown, has been accused of suppressing black creators. In its statement, TikTok set out specific steps to address diversity with the creation of a diversity council. Twitter and several law firms (including Freshfields US) have declared Juneteenth (the day of black liberation from being enslaved people in the US) a paid company-wide holiday. 

Finally, in probably the largest reversal on hearing the voice of black employees, NFL commissioner Roger Goodell announced that he was “wrong for not listening to NFL players earlier” when they were reprimanded for taking a knee to protest police killings of unarmed black men and women and encouraged teams to hire former quarterback, Colin Kaepernick, the leader of those protests. 

Power of Practice

The last category is one that did not exist in any form in the old playbook – a critical self-examination of how a business’ own practices have historically contributed, and continue to contribute, to a system that actively oppresses black people. These practices range from ones that aggravate micro-aggressions to ones that endanger black lives through technology. 

Walmart, Walgreens and CVS each declared they will stop keeping locked display cases for “multicultural hair and beauty products” which for many years gave their customers of color the impression that the company viewed them as likely shoplifters. NASCAR, one of the most successful brands in the US for stockcar racing, pledged again to ban the display of the confederate flag from all NASCAR events and properties stating the flag is “contrary to [their] commitment to providing a welcoming and inclusive environment” after a failed attempt to enforce an earlier ban following the shooting of 9 black people in a Charleston church.

Other companies focused on their practice of marketing certain products. HBO Max temporarily pulled movies like “Gone with the Wind” for their stereotypical images of black people until they could reissue them with historical context.  Similarly, the Paramount Network permanently took their show “Cops” off the air for its glorification of police violence against black communities.

Another more direct equity sharing statement came from retailer Sephora, which pledged to devote 15% of their shelf space to black owned businesses.

Finally, IBM and Amazon both made public decisions on their facial recognition products. Critics have advocated that this software misidentifies people with darker skin and thereby puts black people and other people of color at higher risk of police action.  IBM pulled its product and Amazon said it would impose a 1-year moratorium on police use of the product. 

What should business do?

This survey of recent statements suggests that for business to contribute to meaningful change, they will need to follow a new playbook to address systemic issues:

  • Share your platform to give voice to your black customers and suppliers;
  • Donate to frontline organizations of change but also increase your percentage of procurement and investment in black owned businesses, suppliers and funds so they can build real equity;
  • Set concrete targets for hiring black employees and include black executives on the inner leadership teams with positions of authority;
  • Build radically inclusive corporate cultures; and
  • Broaden your brand beyond stereotypical images and a narrow customer base.

This is clearly just the beginning.  More work needs to be done and more missteps will be made along the way.  As long as businesses keep an open ear to their critics, they can play their part in bringing about racial justice and equality for a sustainable future.    

“My advice to [CEOs] is to throw out the old playbook…More is going to be demanded of corporations, and more should be demanded, because they have a tremendous influence on how we live our lives.” Darren Walker, President of the Ford Foundation


human rights, corporate governance, diversity and inclusion, covid-19