Corporate America confronts racism. Why this time may be different.
After George Floyd died at the hands of a Minneapolis police officer, corporations across the country spoke out against police brutality and systemic racism.
McDonald’s and Nike put out videos on social media. “For once, don’t do it. Don’t pretend there’s not a problem in America,” the athletic shoe company said in its message. NASCAR, the racing body, banned the Confederate battle flag from all its auto races. The Business Roundtable, an association of CEOs at America’s biggest companies, formed a new committee to find solutions to racial inequality.
Activists are hoping to turn this moment of corporate attentiveness into a powerful movement for social change. Can it really happen? American companies have an inconsistent record of pushing reforms for people of color – sometimes superficial; sometimes essential. The question is: What has really changed?
On one hand, corporate America is still fundamentally driven by profits – it generally does things that are good for business, not for moral reasons. “Imagine what it would look like if Coca-Cola put its legal team to work prosecuting civil-rights violations!” says Nathan Connolly, director of the Racism, Immigration, and Citizenship program at Johns Hopkins University in Baltimore.
Yet others argue that a number of business and technology trends, in play before Mr. Floyd’s death, give reasons for optimism, too. One of the indicators is the sheer mass of the protests generated this time. Previous killings of Black people by police have not sparked the number of domestic and even global demonstrations that have happened in the past three weeks.
“Historically, we’ve seen a similar playbook where a statement is issued, a few contributions are made, and then it’s back to business as usual,” says Rod Robinson, founder and CEO of ConnXus, a firm that helps companies diversify their supply chains. “But I’m seeing a lot more momentum around the issues now.”
His own company, for one, has seen in recent days a significant increase in calls from companies – from existing clients wanting to increase their use of minority-owned suppliers and new firms wanting to start the process. Last month, ConnXus was bought out by Coupa, which aims to mainstream supplier diversification.
Another factor is the proliferation of media, including social media. If a company’s words aren’t matched by deeds, the disconnect can be called out almost instantly. Those speaking up include current and former employees, who are often feeling more willing and able to speak out than prior generations of workers. Such pressure is far from a guarantee that substantive change will occur, but it’s a shift in U.S. culture.
In the 1960s, “there was no expectation that General Motors would have a position” on civil rights protests by African Americans in the South, says Benjamin Waterhouse, a historian at the University of North Carolina at Chapel Hill. Today “companies respond to public pressure, which is something that can be mobilized much more effectively and quickly in a modern media environment.”
Many consumers, too, have grown more socially conscious. And the threat of even a small decline in customers “puts pressure on managers not to be on the wrong side of these things,” Mr. Waterhouse adds.
Another shift, fueled by these wider societal trends, is the change in how corporations see themselves. In the 1980s, any timid notion of a corporation’s social obligations gave way to a narrower view that a company’s only real obligation was to its shareholders. But more recently, the corporate social responsibility movement has pushed back against this bottom-line notion, and gradually firms have begun to look at their responsibilities through a broader lens. Last August, the Business Roundtable reversed more than 20 years of support for shareholder primacy by issuing a new statement, saying the purpose of the corporation was to benefit “all stakeholders – customers, employees, suppliers, communities and shareholders.”
The confluence of these forces have combined to cause many corporations to issue statements of support for the Black Lives Matter movement, a position that would have seemed improbable only a couple of months ago.
Some of the moves are symbolic. Besides NASCAR’s ban on the confederate flag, Pepsico announced Wednesday it was retiring its 130-year-old Aunt Jemima brand, long criticized for its stereotype of a Black female servant or slave. The same day, Mars Inc. said “now is the right time to evolve the Uncle Ben’s brand,” which depicts an elderly African American farmer. And Conagra said it would review its Mrs. Butterworth’s brand, another Black stereotype the company conceded “may be interpreted in a way that is wholly inconsistent with our values.”
While such steps are important in their own right, activists say, real progress against systemic racism can’t be made without addressing the persistent income and wealth disparity between Black and white Americans.
“What we really need to see is corporations taking the next step,” says Cynthia Muller, director of mission investment at the W.K. Kellogg Foundation in Battle Creek, Michigan, which has a long tradition of funding programs addressing racial economic disparity. “It’s really going to require corporations to have legitimate and tangible skin in the game. And that means investment.”
She points to companies like Slack, whose “Slack for Good” initiative is helping Black and Latino technology professionals in their first two years and training incarcerated people for skilled jobs in the tech industry once they’re released.
Procter & Gamble last week debuted a new social consciousness ad, “The Choice,” which implores white America to take a stand against racism, a followup to two acclaimed ads dramatizing the kinds of discrimination people of color endure. The consumer-product giant has also established and donated $5 million to a Take on Race fund to support groups fighting for more racial equality.
“The deep problems of systemic racism and inequality have been institutionalized over centuries and will not be solved unless the white community steps up to help,” Marc Pritchard, the company’s chief brand officer, said in a statement to the Monitor. “But many people are frozen, uncertain of what to do, having avoided the issues or never dealt with what is now inescapable. It’s time for us all to make the choice to take action.”
Anthem, a health-benefits company rated No. 1 among corporations in its treatment of workers by Just Capital’s ranking of social responsibility, and its foundation have announced a $50 million five-year pledge to fight racial injustice, strengthen communities, and address health inequities through its links with more than 4,000 nonprofits.
To allow individuals to participate, various entities are creating investment vehicles aimed at reducing racial inequality. For example, the NAACP has teamed up with Impact Shares to create the Impact Shares NAACP Minority Empowerment exchange-traded fund. Last fall, investing firm Candide Group launched the Olamina Fund, which invests in groups that tackle inequality and promote social justice for women and people of color.
“Money is so integral to racial justice and economic justice and whether you have $10 or $10 million, you have a part in this story,” says Morgan Simon, founder of Candide Group and author of “Real Impact: The New Economics of Social Change.”
Amid all this, even companies making tangible efforts can be open to criticism that they aren’t doing enough.
Slack CEO Stewart Butterfield, who has been outspoken about the need to confront systemic racism in technology, reportedly has faced criticism in recent days from Duretti Hirpa, a Black engineer with a track record of promoting diversity. Slack had publicly lauded her efforts on the issue, but when it came to promotions, she says she was told such efforts were merely extracurricular activity. When Mr. Butterfield said he was sorry her diversity work was not valued, The Washington Post reported, Ms. Hirpa tweeted, “Alas, you’re just a CEO in the position of power to change that!”
McDonald’s, with its long history of management diversity and the use of Black-owned suppliers, nevertheless has come under fire for losing Black franchisees in recent years and not doing enough to support its front-line workers who are primarily people of color.
Many corners of corporate America have faced criticisms for relegating discussions of racial equity to diversity committees that have no real power to implement institutional change.
This week, a former Morgan Stanley executive who headed the investment bank’s diversity efforts filed a racial bias lawsuit against it. Marilyn Booker filed the lawsuit on behalf of Black female employees who allege systemic discrimination at the firm.
While improving economic equality is indispensable to battling racial injustice, it’s not sufficient to overthrow it, says Dr. Connolly. Corporations have stepped in with their lobbyists at key times, such as their defense of affirmative action when the Reagan administration tried to dismantle it in the 1980s. But he says they did so, not to improve public policy, but because diversity was seen as good for business.
Corporations “are going to do everything but give you their political power,” he says. “They’re not going to give you access to their lobbyists. They’re not going to help you draft the legislation. ... Maybe you get a ‘Black Lives Matter moment,’ but is that going to be sustainable? That’s where the rubber meets the road.”
Editor's note: This story has been revised to more accurately convey Dr. Connolly's analysis.