The outpouring of rage and empathy that followed shook the foundations of Corporate America in unprecedented ways, but experts say it’s far too early to say whether the business world’s pledged commitments to lasting social change will stand the test of time.
“Change was never going to happen overnight,” said Rashad Robinson, president of Color of Change, a racial justice nonprofit that works with private companies. “So many of the corporations that spoke up have deep systemic challenges that can’t be solved with a tweet, a statement, a diversity committee.”
Floyd’s murder changed Black Lives Matter from a controversial social justice movement to an almost ubiquitous corporate mantra almost overnight. Fortune 1000 companies poured billions of dollars into programs designed to address systemic racism and committed to fulfilling quantifiable racial hiring quotas after decades of resisting them.
In June, Reddit appointed Y Combinator Managing Director Michael Siebel to replace its co-founder, Alexis Ohanian, on the company’s board after Ohanian resigned and requested to be replaced by a Black person. In October, JPMorgan Chase committed to invest $30 billion to promote racial equity over the next five years. Bank of America, Citi and Goldman Sachs made similar, billion dollar pledges.
The Local Initiatives Support Corporation, the nation’s largest community development financial institution, says it set a new fundraising record last year, enabling it to invest $2 billion into historically undeserved communities, both rural and urban.
“We raised probably two and a half times what we’ve raised in other years,” said Beth Marcus, EVP of resource development for LISC. “We saw Corporate America step up in some unprecedented ways. We were able to make grants to 12,000 small businesses. More than 80% of those are owned by minority individuals.”
A steep hill to climb
But Marcus said it will take much more than one year of funding to have a lasting impact on America’s racial wealth disparities. A Brookings Institute study published in December estimated it would cost more than $10 trillion to close the racial wealth gap between Black and White US households.
A recent analysis from consulting firm Creative Investment Research found that only $250 million of the estimated $50 billion US companies have pledged to racial equity causes within the past year has so far been spent or assigned to a specific program.
“What’s key is that we have to keep that momentum going and we have to make sure it’s sustained,” Marcus said.
Fortune 1000 firms have also made notable progress diversifying their C-suites and boardrooms. In December, Nasdaq CEO Adena Friedman proposed a new rule requiring companies listed on any NASDAQ-owned stock exchange to have at least two “diverse” directors on its board, including one woman and one member of an “underrepresented” minority group. The US Securities and Exchange Commission has delayed issuing a decision on the proposed rule until later this year, giving members of the public additional time to weigh in on the matter.
But recent data shows that most of those diversity gains have gone to women and Latinos, not Black Americans, according to Mike Hyter, president and CEO of the Executive Leadership Council, a national organization for current and former Black CEOs and senior executives.
US companies added 82 Latinos to their boards between January and March, a 331% year-over-year increase from the same span in 2020, according to data unveiled in April by the Latino Corporate Directors Association.
One-hundred forty-five S&P 500 companies have added at least one Black director to their board since last June, but the number of Latino board members has quadrupled since a year ago, according to Bloomberg. In March 12, the news outlet also revealed that women now occupy roughly one-third of all S&P 500 board seats for the first time ever.
“I think there is still a stigma about Black executives talent and abilities that needs to be addressed,” Hyter told CNN Business. “The perception of limited ability as compared to others is still prominent in spite of the incremental gains, which is why we need to remain vigilant.”
Robinson also emphasized that companies need to commit to independent diversity audits instead of merely evaluating themselves.
“That’s like a police department saying they’re going to do an investigation and it’s only internal and we’re supposed to trust it,” the Color of Change president said. “Some companies are doing better than others, but they all have a long way to go. There is no ‘mission accomplished’ here.”