By Michael McAfee and Mahlet Getachew
Amid a raging pandemic, a collapsing economy, and historic protests against racial injustice, 2020 laid bare the hard truths of modern American capitalism. As we enter 2021, we are still grappling with many of the same issues that have been with us since our nation’s founding – rampant economic inequality and devastating systemic racism.
We can no longer ignore the structural failures of our nation. In the richest country in the history of humankind, more than 100 million people live in or near poverty – most of them people of color.
We need a new path and that path is equity – the just and fair inclusion into a society in which all can participate, prosper, and reach their full potential.
But for far too long we have outsourced the building of an equitable nation to the nonprofit sector and civil society. As long-time travelers in the equity movement, we know we cannot do it alone.
To build the equitable nation, every American with the power to influence and shape our society must step confidently into the racial equity movement.
Corporate America has too often happily taken a backseat in the movement, at most issuing bland solidarity statements during times of intense focus (like last summer’s Black Lives Matter protests) and then drifting back into the shadows when the spotlight dims.
That is simply not enough and no longer acceptable. In our capitalist system, corporations have both contributed to and benefited from structural racial inequities. They must become agents of equity. The nation’s economic renewal depends on it.
Our invitation to corporate America is the CEO Blueprint for Racial Equity, a pathway that shows how corporations can help build an equitable nation for all. In this article, we share an overview of the Blueprint, our guidance for corporations to lean into the Blueprint, and how we can build the big tent we need for a truly equitable America.
The CEO Blueprint for Racial Equity
Since late 2016, PolicyLink has partnered with FSG to identify and amplify how corporations can advance racial equity while also creating business value. Backed by rigorous research and illustrated with powerful case studies, our publications – The Competitive Advantage of Racial Equity (2017), Financial Services and the Competitive Advantage of Racial Equity (2019), Health Care and the Competitive Advantage of Racial Equity, (2019) and Advancing Frontline Employees of Color (2020) – lift up racial equity as a new source of innovation and growth for corporations.
Building on this body of work, we released the CEO Blueprint for Racial Equity with FSG and JUST Capital in July 2020. The release came in the midst of unprecedented national attention to racial injustice and systemic racism—so poignantly manifested by the tens of millions of Americans from all racial, ethnic and generational backgrounds who took to the streets in support of the Black Lives Matter movement while in the throes of the COVID-19 pandemic. Also unprecedented at the time of our publication was the dizzying array of corporate solidarity statements in support of Black lives, something we have all become accustomed to, but this time matched with several billion dollars pledged in support of the Black community. Though encouraging to see the tide of the racial equity movement reach the shores of corporate America and gain such broad support across the nation, the Blueprint was not merely born out of this year’s historic groundswell of activism. It asks CEOs to go much further and deeper than solidarity statements and scattered actions.
Rooted in more than 20 years of research and expertise that built the racial equity movement by centering the 100 million economically insecure people in America (a staggering number that also includes 25 million white Americans), the Blueprint reflects our belief that achieving racial equity in this nation is not just a moral imperative but also an economic imperative. It will require corporate America to come together with the nonprofit sector and civil society to achieve the lasting moral and economic renewal this nation desperately needs. It therefore calls on CEOs to deeply consider their spheres of influence and ask themselves: How do I need to lead in this moment and beyond? What is the legacy I want to leave?
As CEOs consider these questions and take a hard look at the intended and unintended impact of their products, operations, policies, and practices on people of color and low-income communities, the Blueprint provides a starting roadmap of actions they can take within each of the three domains of a corporation’s influence.
Domain 1: Within the Corporation
The Blueprint outlines concrete actions related to:
- Designing HR policies and practices that are actively antiracist, not merely “not racist,” such as paying workers living wages at all levels and providing wealth-building benefits;
- Expanding worker power and voice, including providing board positions for workers of color;
- Designing products and services that center racially equitable outcomes by, for example, investing in inclusive R&D to actively address racial inequities; and
- Designing operations and the supply chain to center racial equity, such as eliminating internal policies that prevent small businesses of color to be part of the supply chain.
As these actions illustrate, achieving racial equity within the company, means much more than implementing diversity and inclusion (D&I) programs. After decades of lackluster results, we know that traditional D&I programs have been woefully inadequate at moving companies closer to racial equity within their ranks, operations, products and services. In this powerful moment of renewal, the time has come for corporations to completely reimagine their D&I efforts by stretching beyond HR-focused programs and policies and centering equity and justice.
Domain 2: Within the Communities in which Corporations Operate
The Blueprint outlines concrete actions related to:
- Redesigning corporate philanthropy to address structural problems, including supporting organizations led by people of color;
- Advocating for local policies that address structural inequities, such as advancing local justice and liberation policies for people of color; and
- Supporting environmental justice by mitigating the environmental impact of the corporation’s operations, specifically on communities of color.
At the heart of the actions in this second domain are two key questions CEOs need to ask themselves: Are we reinforcing barriers to advancement within the communities in which we operate? How can we meaningfully support the communities where we work? Answering these questions will require authentic and sustained connections with local communities beyond chambers of commerce and local government. In addition, taking meaningful action within this domain requires having a frame of mind that connection to one’s community is not just about charity and extends beyond once-a-year “give back” campaigns.
Domain 3: At the broader Societal Level
The Blueprint outlines concrete actions related to:
- Reconsidering national-level corporate lobbying strategies to advance broader societal needs versus solely focusing on the corporation’s profit-driven interests;
- Committing to more inclusive impact investing; and
- Assessing internal and external communications with a racial equity lens.
As CEOs consider the full scope of their corporation’s influence and impact, the broader societal domain cannot be overlooked. The national platform is where CEOs and corporations have more power than anyone else, outside of state actors. When CEOs speak, our lawmakers listen. The political and economic power wielded by corporate America, therefore, presents an unparalleled opportunity for advancing racial equity and economic renewal. Imagine CEOs and corporations raising their voices to support the public policies championed by community leaders with lived experience. This is what we need from corporate America. Otherwise, we will continue tinkering around the edges of meaningful reform, never quite achieving racial equity or the lasting economic renewal that we need.
The Blueprint is just a starting point in our efforts to support the evolution of antiracist, equitable corporations. We continue to invite discussion and collaboration with business leaders, equity advocates and community leaders with lived experience, corporate affinity groups, business support organizations and the investor community on how to develop it further and ultimately transform our nation’s corporations to be more equitable. As we engage in these discussions and center the voices of those most burdened by racial and economic inequity, we are also taking the next step of developing racial equity business standards and accountability frameworks to support corporations on their journey.
Guidance for Corporations to Lean Into the Blueprint
Since releasing the Blueprint, we have received valuable feedback from business leaders and observed some confusion around the appropriate role of corporations in the racial equity movement. The following provides a summary of the feedback and observations along with some of the guidance we are providing to CEOs and other business leaders.
The most common feedback we are hearing from business leaders so far is that they are ready to do this work, but many are not sure where to start, how to prioritize or how to measure outcomes. Our guidance to corporations in getting started on the path to uncovering their opportunities is to conduct an enterprise-wide racial equity audit, for we cannot set a meaningful path forward without knowing where we are and how we got here. In addition, we envision that our upcoming work with FSG and JUST Capital on racial equity business standards and accountability frameworks will also help corporations (i) develop measured, multi-year plans based on the outcome of their enterprise-wide assessment, (ii) prioritize their actions within each domain in alignment with the business’ objectives, and (iii) effectively measure outcomes, year after year.
Perhaps not surprisingly, there are also some common misconceptions we hear around the role of corporations in the racial equity movement:
- Companies have a strong bias towards doubling down on D&I programs and initiatives, and express trepidation or discomfort around advocacy-related actions within the community and societal domains of influence. Some question whether such a role is even appropriate for business.
- No doubt closely related to the above, there seems to be an assumption that human resource departments and D&I leaders are the main owners of a corporation's racial equity efforts.
- Lastly, there is a common misconception that large investments of capital are required in order for corporations to adopt more equitable and just practices.
Here, we unpack each of these misconceptions, share our guidance to CEOs and define what this moment really requires of corporate America.
1. Racial Equity and Economic Renewal Depends on Corporations Engaging In All Three Domains and CEOs Already Have the Right Skills and Resources to Do So Effectively
Some commentators and even CEOs have argued that corporations should not get involved in social reform and that CEOs should only focus on making profits. This line of thinking misses a number of value-creating opportunities for corporations and overlooks the role corporations have played and continue to play in perpetuating racial and economic inequity. To address this, our guidance to CEOs and business leaders (and all those who support them) includes the following:
- We already have all the data. The moral case, business case, economic case—all the possible arguments for racial equity—have been made effectively for years. Our National Equity Atlas provides a wealth of data to this end. If business leaders keep waiting for more compelling cases to be made for this work, it will be too late.
- Corporations have unparalleled resources sitting on the table. On an annual basis, the non-profit sector has approximately $1 trillion and the public sector has $3 trillion at their disposal to address social issues. In stark contrast, the private sector has $22 trillion in resources annually.
- Society and businesses are not separate. Businesses operate within and heavily influence our society, including social issues, every day. Deciding not to play an active role in promoting racial equity is effectively choosing to play a role in promoting the status quo of racial inequity. That is the heart of the problem with systemic racism—those with the power to change our structures and systems are our stewards for them and doing nothing leaves those toxic structures intact.
- Corporations have unique abilities to shift our laws and regulatory frameworks. Through lobbying, political donations and other advocacy, corporations have demonstrated tremendous skill in bending our nation’s laws and regulations to their will. Those skills, ably directed and wielded, could help unlock the public policy wins we need to finally achieve racial equity and economic renewal.
- The demand from all stakeholders is evident. The data is plentiful that workers, consumers, communities and institutional investors want companies to invest in racial equity and will increasingly demand companies meaningfully address it within their own ranks and step up, through their products, practices, and profits, to be agents of positive social change, otherwise they will vote with their dollars and their feet.
In short, our guidance to corporate leaders is that they already have the tools and resources required to do this work; it is their responsibility to get involved in all three domains of their influence; and their stakeholders will increasingly demand it.
2. This is Fundamentally A Leadership Moment For CEOs
The important and hard work of HR and D&I leaders and teams in this moment cannot be overstated, however, CEOs need to see this as their leadership moment. It is CEO leadership that has the power to shift business. If CEOs are not fighting for equity and justice within the organization and externally, then we will not achieve racial equity or economic renewal. The additional guidance we offer to CEOs (and those that support them) includes the following:
- Vulnerability is required to do this work. CEOs need to look deeply internally and externally and seek the hard truths. Own that what has been done in the past has not worked. Be transparent about opportunities for improvement and make a plan to address them. Be mindful that risk management efforts need to fully consider and weigh the business risk (short-term and long-term) of continued racial inequity within the company and within society.
- The apparent tension between increasing profits and supporting social goals disappears when we think long-term. While the structure of our markets and regulatory frameworks may present headwinds against long-term thinking, CEOs have the power to change that through their advocacy.
- Commitment drives us and shapes who we are. Making racial equity a business priority, embedded within the quarterly and annual goals of the organization, year after year, is how to translate solidarity statements and lofty goals into actual results.
In the same way CEOs lead on innovating in their sectors, we are counseling them that they also need to lead on racial equity and economic renewal. CEOs have the power to plant the seed of racial equity so deep into our national consciousness that we finally, collectively begin to respond to it.
3. Becoming an Antiracist, Equitable Corporation is More Affordable Than the Cost to Corporations (and Our Nation) of Maintaining the Status Quo or Tinkering Around the Edges
Achieving racial equity in this nation is about using power more justly and equitably. The fact is that we do not need large initiatives and departments to run antiracist, equitable corporations (setting aside the hard work and resources clearly needed for reckoning and healing). What we need are CEOs, boards and other business leaders who are willing and able to practice antiracism and center equity in all their actions – developing strategy, innovating and making critical business decisions. Our guidance to CEOs and other business leaders includes how to apply the equity lens to decision-making by asking on a day-to-day basis: Who benefits? Who decides? Who owns? Who pays? Who leads and governs? Who is missing? Is anyone harmed? Seeing through the equity lens and engaging in this practice should ultimately become second nature to CEOs, boards and all other business leaders, and it does not cost any money.
In addition, like many others, we are sharing our research in this area which includes the key insight that racial and economic inequity is costing this nation trillions, certainly more than what it would cost us to invest in antiracist, equitable business practices.1 We also counsel business leaders on the hidden costs and missed opportunities ahead if corporations choose not to engage in this work or simply tinker around the edges – for example, that more talent will vote with their feet, potential new markets will go unexplored, and economic growth will continue to be stifled.
Translating the Blueprint into Racial Equity Standards – We Are Building a Big Tent
The moral and economic imperatives for corporations to join the equity movement are clear. It is time for the next step—racial equity business standards and accountability frameworks.
These metrics will not be easy to design because our nation was never designed to be equitable. Our structures and systems are built to oppress and harm people of color and low-income communities. But that initial inequitable design cannot stop us from imagining and building what could be.
We must do the hard work of developing new standards and frameworks that strengthen our multiracial democracy and economy. We must innovate from the ground up. Corporations must work with equity leaders to develop their multi-year plans for disclosing, measuring, and speaking publicly about their racial equity journeys.
None of us—including CEOs—can do this work alone. That is why we are counseling America’s business leaders, and that is why we invite all stakeholders to work with us. We are building a big tent, working together with corporations, philanthropy, equity advocates, business affinity groups, activists, civil society, and ordinary citizens. We will teach each other. We will learn from each other. And we will build together.
From the Constitutional Convention to Reconstruction to the Civil Rights Movement, our nation has too often failed to meet the moment when racial equity was within our grasp. We are at another historic inflection point. We must go big to finally achieve the dream of racial equity. It will take a generation, but if we do it right, we can remake this nation to work for all of us, not just some of us.
Imagine all Americans prospering within a generation. It is possible, if we center the 100 million and we join together to realize the promise of equity.
Michael McAfee is President and CEO of PolicyLink, and Mahlet Getachew is PolicyLink’s Managing Director of Corporate Racial Equity.