Treasury Talent

A year of progress but much more to do

Published: Jul 2021

A year on from the Black Lives Matter (BLM) protests of 2020 following the murder of George Floyd we look at the pledges, promises and progress on racial equity in corporations.

In a CNBC interview last year, Kenneth Frazier, then Chief Executive of pharmacetical group Merck, called for concrete action over and above the corporate outpourings in response to the murder of George Floyd. Beneath the financial pledges to the black community and organisations advocating racial equity, signed letters and statements of intent Frazier, whose recent retirement from Merck after 30 years at the company leaves only three Black CEOs at Fortune 500 companies, passionately urged corporates to “step up” to close the opportunity gap between white and black people with training and education schemes. “People put out statements, they put out platitudes, they say this is terrible. Business has to go beyond what is required and beyond just statements; businesses have to use every instrument at their disposal to reduce the barriers that exist.” One year on from Floyd’s murder, his death has catalysed corporate diversity, equality and inclusion efforts but on several key measures, much more needs to be done.

“The breadth and growth of these types of efforts have been remarkable, especially if you compare it to where we were five years ago,” says William Michael Cunningham, Founder and CEO of consultancy Creative Investment Research. “A lot of well-intentioned activities and statements have been made, but certain organisations are doing better than others.”

His key focus is on whether companies have delivered on their financial pledges like promises of donations to civil rights organisations, targeted investments in communities of colour and costly overhauls of internal recruitment and retention programmes. Of the US$67bn pledged so far, only US$652m has been committed, says Cunningham, citing data drawn from the Creative Investment Research Black Lives Matter (BLM) Donation Tracker, put together to analyse and assess the progress of pledges. “It is more than a pledge – companies need to show how they are going to effectuate that pledge,” he says. “They don’t need to give all the money right away, but they do need to put time and thought into it.”

In a quest for more transparency, he has submitted a petition to the Securities and Exchange Commission requesting a rule requiring companies to disclose their activity surrounding BLM pledges. Without any legal recourse to push companies to follow through on their promises, transparency is the only way, he argues. “We would like to see a process that holds all of these corporate IOUs. It would give us the ability to ping these corporations and ask them about the specifics concerning their activities in this area.”

Brand pressure

Amongst the organisations making the biggest strides, consumer facing industries and brands are leading the pack, pushed on by young, diverse and high spending consumers who have changed their buying patterns based on a company’s response to racial equity. According to a survey by PR agency Edelman, 60% of Americans said they would avoid or boycott a brand based on its response to Floyd’s killing. “Two-thirds of consumers globally now self-identify as belief-driven buyers. They are exercising brand democracy, supporting those products that stand with them on important issues,” wrote Richard Edelman, Chief Executive of the company in a post on Edelman’s website last year. Alongside consumers, employees, especially millennials, are also forcing corporate change, says Cunningham. “People are saying they won’t work for companies without a diversity mandate. They are saying if you don’t support these efforts, we won’t work here.”

The importance of aligning a brand to reflect the values of customers, employees and other stakeholders including shareholders is driving strategy at telecoms company T-Mobile. In the last year, the company has launched a new Equity In Action (EIA) programme outlining how to improve racial equity. “EIA offers a roadmap that inspires us to lead by example, put people first and ensure diversity, equity and inclusion (DE&I) remains at the centre of everything we do,” explains Holli Martinez, Vice President of Diversity, Equity & Inclusion at T-Mobile. “When I say everything, I mean everything. The values we live by, the investments we make in our employees, the products and services we offer, the suppliers we do business with and the communities we advocate for.”

In a first step, T-Mobile hired an external diversity and inclusion consultant to conduct 13 focus groups with employees from different races, cultural backgrounds, skillsets and levels of work experience, drawing together feedback to highlight where the company needed to focus. “The process took time, but we knew that no one understands our business, pain points and strengths better than our own employees,” she says.

Now a five-year EIA plan includes multi-faceted DE&I efforts across three focus areas spanning brand, talent (with a promise to increase diversity in leadership at every level) and culture, where the focus is on “providing the tools to build inclusive habits and behaviours as part of employees’ day to day lives.”


Successful corporate change depends on integrity and authenticity, says Cunningham. Reflecting on the rush of statements made last year, he says genuine and credible corporate behaviour whereby companies speak out on the values they hold rather than virtue signalling is the first rule of thumb. “Make it authentic,” he advises. “It is ok to say you don’t know the way ahead. What is important is to say that you are going to learn, and that you can’t go back to the old ways.” A second step is to put money behind it, and for companies to dig into their own pockets. He also counsels on the importance of companies focusing on black equity rather than equality issues amongst a broad cohort of minorities. “It is okay to say that in addition to efforts to address anti-black discrimination you are going to look at discrimination across the board, but the real issue is discrimination against black people and for authenticity, companies should focus here.”

A point echoed by India Gary-Martin a leadership expert and DEI strategist and Founder and CEO at Leadership for Executives who says amid the progress of the last year she is less encouraged by the reticence of some leaders to call racism what it is. “It is important to acknowledge the root so that we know what we are solving for. It isn’t a personal indictment. We live in a society that we didn’t create but that requires all of us to fix. It’s about reimagining business to be reflective of modern society.”

Recruitment practices

Cunningham is encouraged by many of America’s largest companies setting hiring and promotion targets. But he also warns that recruiting more black employees isn’t necessarily the panacea. “One of the things we’ve seen is many new black people, especially women, get hired and promoted. It’s a good first step, but these are just jobs and if they are given out, they can also be taken away. What we need to see is more innovation with respect to capital allocation and money.”

Elsewhere, companies are starting to report detailed demographic data with more companies prepared to publicly share detailed workforce data by race and gender. Known as EEO-1, it is private unless voluntarily disclosed; recent examples include Goldman Sachs revealing that just 49 of its 1,548 executives, senior officials and managers in the US are black.

Collating data on a company’s ethnic makeup has been a strong driver of change in the media industry, says Femi Otitoju, Managing Director of London-based Challenge Consultancy which advises companies on improving diversity and who observes a spike in the number of people appointed within companies dedicated to improve racial equity and develop talent. However, she says companies mustn’t stop here. “The data has to go further back,” she urges. “Companies should explore the number of black people they’ve attracted to the business; how many made the short list, how long they stayed, how many were promoted and if they left, why and where they went. Only then can they see the patterns and take action.”

Equally concerning for her is the fact few boards are yet tying any of their executives’ pay to diversity targets. “Leaders and managers should be held to account,” she says. “Cultural competency and inclusive leadership are skills that you can acquire just like anything else and should be rewarded.”

Shareholders speak up

Shareholder pressure is one area of notable change over the last year. There has been a sharp rise in the number of diversity proposals at US company annual meetings from shareholder groups like Service Employees International Union and CtW Investment Group. For example, nine out of ten investors backed a recent call for IBM to produce an annual diversity report. BlackRock is conducting a deep dive into its business to see how it may have contributed to racial inequities in the financial system following a request from a shareholder. Progress for sure, but Otitoju says many other companies still resist diversity proposals fearful of what it reveals. “If the leadership team is white and just a few black people are languishing in lower levels they won’t want to publish.”

Meanwhile Gary-Martin urges companies to publish demographic data no matter how woeful the underrepresentation – alongside the promise of change. “Publish demographic data alongside a well thought out strategy for inclusion with specific goals. Denying that there is underrepresentation (denial is not only verbal) reinforces stereotypes that leaders are not in touch with the needs or wants of teams and clients.”

Along with shareholder pressure, financial infrastructure like exchanges and rating agencies are also beginning to get on board. The Nasdaq said in December that companies on its exchange should have at least one woman and one member of an under-represented minority on their boards. Goldman Sachs said that it would not take companies public from this year without at least two diverse board members. Last year Moody’s said UK banking group Lloyds’ programme to promote more black employees to senior roles was “credit positive,” for the first time linking a company’s stability to ethnic diversity measures. As for progress in meeting Frazier’s impassioned call for more corporate action on racial equity, campaigners say it’s slow, but the genie is out of the bottle. “We are having conversations that we’ve never been able to have before. Change is happening and while it may seem that it is happening at a snail’s pace, we’ve taken a quantum leap over that last year. Conversations about race are not going to fall off the table,” concludes Gary-Martin.

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