Corporations Can and Must Become Agents of Equity, Says Coalition

Three nonprofit organizations — FSG, PolicyLink and Just Capital — are cooperating on a project called the Corporate Racial Equity Alliance, which would create “rigorous corporate performance standards” for measuring goals and commitments associated with a company’s policy statement for racial and economic equity.

FSG consults with corporations, foundations and nonprofits to strengthen their corporate profiles. FSG and PolicyLink — the latter a national research and action institute advancing racial and economic equity — have worked together since 2015 on publications on the subject of racial equity. And, in 2020, the two organizations began the Alliance project with the addition of Just Capital, an independent nonprofit contributing the data and insight necessary for corporations to deliver on their goals.

To quote from the coalition’s vision and mission statement: “An equitable nation includes corporations taking action to improve the lives of the 100 million economically insecure people in America living in or near poverty, within one generation.”

A methodical process to develop corporate standards began in July of 2020 when PolicyLink, FSG and Just Capital came together to publish the CEO Blueprint for Racial Equity, a guide for businesses to address key components, including the intended and unintended impacts of products, services, operations, policies, and practices on people of color and low-income communities. The group offers key recommendations across the three domains of corporate influence: the company, the community and society.

From October 2020 through January of 2021, the concept was tested with several audiences, including 40 business executives, investors, advocacy groups and youth leaders, as well as participating corporate partners. From there, the corporate standards development process — and the Alliance’s report was published last month.

There are two prevalent assumptions of the alliance: first, that corporations have a moral obligation to make a positive impact. And, having committed to a positive impact, corporations then should be willing to prove the commitment in numbers.

According to Just Capital’s recent polling, 95 percent of Black Americans and 79 percent of Americans overall believe it is important for companies to promote racial diversity and equity in the workplace. And 81 percent of Black Americans and 64 percent of Americans overall say companies have more work to do to achieve racial equity in America.

Further, the Alliance is built on the premise that performance standards are needed for purposes of “accountability, to establish consistency in terms of defining racial equity, and to standardize how businesses should approach, measure, disclose, and speak publicly about their equity journeys.”

The project operates under the leadership of Mahlet Getachew, the managing director of corporate racial equity at PolicyLink. As a former corporate lawyer, Getachew brings an understanding of business risk and strategy development to the program. And, as a first-generation Ethiopian immigrant, her commitment to racial equity has been informed through personal experience as often the solitary Black person in a predominantly white environment. 

“My work and experience along the way helped me understand how power is used in the private sector to shape our economy and democracy," Getachew said. "Whether we want to accept it or not, businesses are shaping our country’s identity and what our collective and individual futures will look like."

“Investors, the most powerful stakeholders that corporations listen to, are increasingly demanding results against commitments … and making investments based on a corporation’s goals met," she added.

However, the idea of management by objectives has the ability to make a C-suite manager a bit queasy, especially where objectives are tied to salary and promotions. 

But what the Alliance suggests is that corporations participate based on their own focus and abilities. IBM’s blueprint wouldn’t necessarily resemble Burger King’s, for example. 

“Standards would be established based on a company’s size and income, and tailored to resources available,” Getachew said. Objectives would be decided internally, and then timeframes and commitments set based on what makes sense for that company. Investors and other stakeholders might participate in the goal-setting process. The CEO Blueprint helps corporations arrive at those priorities and establish standards.

“We are actually just at the starting point of this process,” Gatechew explained. “Accountability standards such as certifications, benchmarks or publicly disclosed information have yet to be decided.” 

Through June, 3, the Alliance is accepting public comments on its proposed standards for equity in the workplace through its website.

Image credit: Cassandra Hamer via Unsplash