Resolutions, commitments, declarations and statements: Not such a Happy New Year for Racial Justice!!

It’s that time of year again and at Next Leadership we’ve been putting our heads together with one of our delivery partners Susy Ndaruhutse. Korn Ferry’s article DEI: ‘A Year of Reckoning’, confirms some of our own findings and also makes for a sobering read. So, we’ve been reflecting on how easy it is to make high profile resolutions, commitments, declarations and statements and how much harder it is to actually follow through on these. Anyone who’s ever made a New Year’s Resolution could, of course, say the same about the semantics of over promising and under delivering. But failing to stick to a diet plan has decidedly different implications to failing to follow through on racial justice commitments.

Susy is an economist, so as world leaders and businesses gather again this week in Davos for the 2024 World Economic Forum (WEF) with “Rebuilding Trust” as their theme, the question she has asked is, have past public statements on racial justice largely been empty words, or has there been any measurable progress? Is it largely business as usual or are businesses serious about tackling issues of diversity and inclusion both within and outside of their offices? The following are some of her thoughts.

2020 was a nadir for racial justice with the murder of George Floyd, a 46-year-old African American, by a white policeman in the US state of Minneapolis on May 25. His death sparked protests in the US and across the world against brutality, racism and lack of accountability within the police. This also resulted in many organisations making public statements to end systemic and institutionalised racism.

In fact, at the June 2020 WEF, a number of WEF partners and members made public statements about their commitment to make their organisations more diverse and inclusive and American society more equitable. These included global organisations such as Apple, Ginkgo Bioworks, HP, LEGO, PayPal, PepsiCo, Uber, Verizon and Visa. By the end of May 2020, just days after Floyd’s death, fifty-five CEOs of global corporations, signed a joint statement uniting against racism and brutality and committed to investing in significant change in order to tackle racial injustice and inequity within their organisations.

For some businesses, public statements included pledges to donate money to organisations working in criminal and social justice, as well as to those working with underrepresented communities in the US. Others promised to increase diversity and representation throughout their organisations, to invest in more diverse supply chains and to provide more educational and training opportunities to underrepresented communities.

It’s fair to say that if you’re a billion-dollar revenue business, giving away a few million dollars may look good as a PR exercise, but it’s ultimately small change and a tiny dent in your overall reported profits, that does not require any substantial change to be made to how you run your business.

So how do different global corporations measure up on progress? And what might “Rebuilding Trust” look like for them going forward?

As part of Next Leadership's Collaborative Leadership programme for organisational leaders and teams, we have developed a diversity, equity and inclusion (DEI) maturity framework to capture organisational commitments to changes they themselves have committed to make. We are presenting the broad brushstrokes here but have provided greater detail in the endnotes (1).

Three and a half years on, progress looks something like this…

The corporations that are maturing most rapidly are those that are making commitments to mainstream DEI in their approach to (i) people (recruitment and talent management from entry level to board level), (ii) the way they do business (having a diverse supplier base; ensuring business processes and initiatives are racially sensitive), and (iii) working with their surrounding communities and society (supporting social, economic and criminal justice; advocating for legislative and regulatory change; investing in community, education and employment initiatives that support the most marginalised). This is coupled with the setting of measurable targets and annual reporting on how they are progressing towards those targets.

If you are looking for organisations to emulate as exemplar students PepsiCo, VISA, Bank of America and HP are the ones to watch!  While a handful have made significant progress, according to Korn Ferry, many others have been depressingly slow or have even ground to a halt, with DEI leaders describing progress in 2023 as ‘“challenging” to “bad.”’(2)

Of course, we are all left with the inescapable challenge to examine the integrity and authenticity of the commitments we make to those around us… within our families, communities, church contexts, our teams, departments, organisations, sectors or spheres. 

Leadership specialists, Jim Kouzes and Barry Posner remind us, “When it comes to building trust, leaders go first.” 

Let us go ‘first’ and lead...  so that our resolutions, commitments, declarations and statements are properly ‘embodied’ and actually create equitable spaces for those most impacted by life’s inequities.

Written in collaboration with Next Leadership

Susy Ndaruhutse is an economist who has spent nearly 25 years working in international development with governments, development partners, United Nations organisations and non-governmental organisations. This has included 9 years in senior management roles at Education Development Trust. She is now an independent consultant supporting leaders and organisations in their journey to greater impact.

Endnotes:

(1). LEGO made a commitment to donate $4m to four American organisations working to support black children and to educate all children about equality. They have not since reported publicly on what this money has helped these organisations to achieve, nor on any other activities they are supporting to promote racial justice. This may be because they are headquartered in Denmark which has a much more homogeneously ethnic population than the US.  In 2021, the LEGO group turned over 55.3 billion Danish Krone (equivalent to $8.1 billion) so their donation is around 0.5% of their annual turnover.

Ginkgo Bioworks invested $1m towards building a more equitable company, technology and society. This included programmes for internal staff recruitment, training and inclusion as well as sponsorship support to conferences such as 2021 BlackinX and 2022 STEMNoire promoting the inclusion of marginalised communities in biotechnology. They have also welcomed two cohorts of Cultivate Fellows – 23 black undergraduate STEM scholars to spend a week onsite at Gingko for networking, professional development and to explore opportunities for career development. However, it is not clear how things are changing for Gingko as a company as a result of these investments. The most recent statement about DEI on their website is from February 2022 and their diversity dashboard does not load.

PayPal took a similar approach committing $535m to support black and underserved communities and businesses. However, they went a step further as they also joined forces with Vista Equity, Boston Consulting Group and W K Kellogg Foundation to form the Southern Communities Initiative to accelerate racial equality in six southern communities that are home to around 50% of the black population in the US. The Chief Executive Officers/Chairs of each of the four businesses are the board members of the initiative providing strategic direction and corporate accountability for action and showing more skin in the game.

In a similar vein, Verizon made an initial commitment to donate $10m to seven organisations working on social justice which was followed up by a further donation of $11m in 2021. However, the company also published an independent 2023 report on its global progress with DEI efforts which included recommendations for further progress. Verizon’s racial diversity of staffing has slightly regressed between 2021 and 2022, so further work is needed to reverse this.

Several organisations made larger and wider reaching commitments including producing some updates on progress. PepsiCo’s Racial Equality Journey set corporate targets across three main areas – (i) people (increasing diversity of staff from interns to leaders), (ii) business (investing in the PepsiCo Foundation’s Black Restaurant Accelerator and increasing spend with black-owned suppliers) and (iii) communities (scholarships and sports programmes for black students).

Similarly, HP set goals for 2024 across three areas – (i) people (increasing representation and inclusion of black/African Americans in the organisation), (ii) industry (increasing diversity of supplier base) and (iii) local/national (reducing digital divide, supporting criminal justice reforms and other legislative/regulatory change).

Likewise, Uber set out a commitment to racial equity across four areas (each with associated actions) – (i) ridding the platform of racism, (ii) fighting racism with technology, (iii) sustaining equity and belonging for all and (iv) driving equity in the community. While they say they are actively monitoring progress and are on track, they have not produced any public report to demonstrate this.

VISA made commitments across similar areas to PepsiCo of (i) people (increasing representation), (ii) community (double match funding to social justice) and (iii) company (increasing supplier diversity).

Apple made an initial investment of $100m in a Racial Equity and Justice Initiative (REJI) and in its progress report from June 2023, stated that this investment has now totalled over $200m. The investment is externally focussed and far-reaching including economic empowerment, criminal justice reform, funding venture capital firms that focus on underrepresented groups and providing grants to learners. In relation to Apple’s products, it has added representation of Indigenous lands to Maps. However, there is no information on what Apple is doing internally to focus on DEI initiatives with staff.

By far the largest financial commitment in volume terms was made by the Bank of America. They made an initial $1 billion, 4-year commitment to advance racial equality in 2020 which was then increased and extended to a total of $1.25 billion, 5-year commitment in 2021. [Note: this is equivalent to around 0.25% of their annual turnover]. These finances were split across three areas – (i) investments, (ii) partnerships and (iii) grants. As a significant proportion was through bonds and other investments, this is more about explicit targeting of investments that were already likely to happen rather than committing new money, and it is too early to report on outcomes from these investments. Nonetheless, the areas of focus including affordable housing, expanded economic opportunities for women entrepreneurs, partnerships with higher education institutions to upskill and reskill black and Hispanic-Latino students, equity capital investments in minority depository institutions and being a founding partners of the Smithsonian’s ”Race, Community and Our Shared Future” Initiative. Their commitment does not include specific reference to their people, but looking at staff demographics, they are a racially diverse corporation that broadly reflects the demographics of the US.

(2). DDI’s 2023 Diversity, Equity and Inclusion Report surveyed more than 1,500 companies in over 50 countries and found that 20 percent of them offer no diversity programming, and leadership support for DEI initiatives had dropped by 18% in the two years since 2020. A separate survey by Revelio Labs covering more than 600 companies, found that from the end of 2020, a large number of companies accelerated the laying off of DEI professionals.