Updated: Jul 5
The protests sweeping our country since the George Floyd murder potently and painfully reinforce a reality that has been collectively denied throughout our history. A growing number of Americans, across every demographic, are now internalizing that Black Lives Matter and that we suffer from systemic racism both within our police departments and more broadly in our country.
Business people at all levels can help make a profound difference reducing racism. Change requires executives, board members, and investors to step-up and use their leadership positions to make a difference. Bank of America has committed $1B over four years to help communities across the country address economic and racial inequality. Employees too can advocate within their companies. As Footwear News reported, employees at Adidas created a 13-member coalition that sent a 32-page deck to North American Adidas leadership with recommendations and hard deadlines on how the company can respond to racial injustices.
So, what should your business be doing to combat racism in all its forms?
Mark Kramer’s recent article in the Harvard Business Review is a great start. Kramer highlights 10 Commitments Companies Must Make to Advance Racial Justice. These are deep and genuine long-term commitments, not just a press release or a small donation. He says companies must commit to:
1. Anti-racism personnel policies and racial-equity training.
2. Pay equity.
3. Giving employees a voice.
4. Supporting full participation in democracy.
a. Make Election Day a paid holiday. Register employees to vote at work.
5. Lobbying for good.
a. Committing at least 50% of your lobbying expenditures to drafting and supporting bills that would improve conditions for communities of color by increasing access to quality education and training, rebuilding infrastructure, protecting consumers, ending racial oppression, rebuilding the safety net, increasing voting rights, achieving criminal justice reform, and making police more accountable. And if your business model relies on immigrants who live, work, and pay taxes in the United States, then stand up for their rights and support a path to citizenship.
6. Paying a living wage.
7. Paid parental and sick leave.
8. Full health care coverage for all employees and support national health care.
9. An employee emergency relief fund or low-cost loan program.
10. Democratize employment applications.
I’d like to add six more:
1. Hiring more Black leaders.
2. Making all political donations transparent and easily viewable on your website.
3. Refusing to give money to candidates that earn less than a “B” grade from the NAACP.
4. Rejecting people or organizations that condone racism.
5. Reforming racist systems within your industry.
6. Investing in education.
Hiring more Black leaders
As the New York Times recently pointed out, multiple studies indicate that Blacks, about 12% of the U.S. population, represent just 4.1 percent of directors in the Russell 3000. Only 3 percent of chief executives, and 1 percent of chief financial officer positions in the Fortune 100 are Black. According to an analysis by the Center for Talent Innovation, Blacks occupy only 3.2% of the senior leadership roles at large companies in the U.S. As Kramer points out, while anti-racism personnel policies and racial equity training are key, more Black leaders need to be hired (or appointed or promoted) in the first place.
Making all political donations transparent and easily viewable on your website
Customers, employees, and investors should know which candidates a company is supporting directly or via PACs. There are a variety of reasons that this would be helpful, but in this specific context, the data can be used to audit if the company is supporting candidates that support or undermine racial and economic equity. Corporate transparency of political donations has been gaining momentum over the last few years, so your business, if not already transparent with its donations, will likely need to be more transparent soon. Among the S&P 500, 73 companies received scores of 90% or greater (which means they are forthcoming on almost all political giving) in the 2019 ranking from the Center for Political Accountability. That number is 28% higher than 2018.
Not giving money to candidates that get less than a “B” grade from the NAACP
On a national level, the NAACP grades legislators based on how often their votes align with the NAACP’s recommendation on civil rights legislation. These recommendations are a barometer for legislation that will advance racial justice for black communities and other communities of color. The NAACP's grading systems include cabinet appointments, bills that require federal contractors to comply with basic federal labor laws, and nondiscrimination laws and bills that require public school accountability with historically marginalized groups.
If your company does not disclose its contributions, you can get some political and PAC donation information today from websites like opensecrets. With this information, you can see if your company and its PACs are donating to legislators getting poor scores from the NAACP.
Rejecting people or organizations that condone racism
When it comes to political speech in business, hypocrisy abounds. For example, the same ViacomCBS that aired 8 minutes and 46 seconds of breathing with the words, "I can't breathe" to remember George Floyd on many of its networks (MTV, Comedy Central, VH1 and others) is currently giving Bill O’Reilly a platform on its Pluto TV brand. O’Reilly has spread racist statements about African Americans in the past and was forced to resign from Fox after it was revealed the network paid $13 million to settle numerous sexual harassment lawsuits against him. Interestingly, The Los Angeles Times is reporting that ViacomCBS employees are pressuring the network to not distribute the O’Reilly show.
Another related example is companies can choose to stop running ads on shows that promote or tolerate racism. Just the other day the New York Times reported that Fox News host Tucker Carlson is losing more advertisers because of his racist commentary on the Black Lives Matters protests.
Reforming racist systems within your industry
In 2019, the New York Times reported that the National Bureau of Economic Research found that black mortgage borrowers were charged higher interest rates than white borrowers and were denied mortgages that would have been approved for white applicants.
That may partly stem from our racist credit system. Credit scores can be the decisive factor behind whether someone gets a job, apartment, or access to an affordable home or business loan—and they are not race neutral. A 2017 review of 60 major U.S. cities by the Urban Institute found that nearly 2/3 had differences in median credit scores of 100+ points between predominantly white and nonwhite areas. For a conventional mortgage, that lower credit score can cost families an additional $100 or more a month and thousands of dollars over the life of the loan. These disparities in credit are one component of the growing racial divides in homeownership and wealth. Major banks like Bank of America, Citi, and Capital One should partner with other financial institutions and community organizations to reform these discriminatory systems.
A similar story can be told about insurance. In a 2017 story, ProPublica found that some insurers were charging statistically significantly higher auto premiums in predominantly minority zip codes, on average, than in similarly risky non-minority zip codes. The difference in premiums was especially stark in Illinois, where nearly every insurer showed a disparity at every risk level. In California, Texas, and Missouri, ProPublica also found inequities. The insurance industry should root out this bias.
While mortgage loans, credit and insurance are just a few examples, similar patterns exist in many other industries.
Investing in education
What kids are taught and how they are treated will affect their viewpoints and biases about others. In a 2014 report, the US Department of Education reported that black students are much more likely to be suspended from preschool than white students. Black 3 and 4-year-olds make up 18% of all preschoolers but represent almost 50% of all preschool suspensions.
The saga continues in K-12 and beyond. In 2016, the Department of Education concluded that black K-12 students are nearly four times as likely to be suspended as white students.
Excessive suspensions for black students are part of the "school-to-prison pipeline," a disturbing national trend wherein children are funneled out of public schools and into the juvenile and criminal justice systems. According to the ACLU, blacks are disproportionately suspended, arrested, and expelled. Specifically, black students are three times as likely to be suspended and expelled from school. Students suspended or expelled for a discretionary violation are also three times more likely to be in contact with the juvenile justice system the following year.
High school graduation rates are also higher for white students.
Research from Stanford University concluded that racial discipline gaps correlate with racial achievement gaps, so it is not surprising that, according to a 2020 report by the Urban Institute, black and Hispanic Americans are 14 to 20% less likely than white Americans to have at least a bachelor’s degree.
To advance racial justice, education needs an equal playing field and that includes issues intricately linked to education success such as nutrition, access to Wi-Fi and computers and so on. Businesses must contribute not only because it is a moral imperative but also because businesses need better educated students. Schools are the pipeline. Some companies have already invested in education and some entrepreneurs have started their own nonprofits to expand access and improve education quality.
Specifically, to ensure the commitment is material, I propose that at least 25% of your company’s philanthropy budget go to reducing racism and improving education for communities of color.
When it comes to commitments companies should make to advance racial justice, the fight will never be truly over. But these sixteen suggestions, Kramer’s 10 plus my 6, are a first step in the right direction. Some might argue that some of these ideas will dampen profits. That is a bunch of malarkey. These commitments are not only the right thing to do, they will help companies and our economy grow in the long run.
And, as I mentioned earlier, everyone has a role to play. As an executive, board member, investor, and employee, you can help make a profound difference reducing racism in our nation and change millions of lives for the better.
So, the question becomes, will you sit on the sidelines, or get in the game and drive your business to help make some or all these commitments?