A few weeks ago, we launched a series of articles on the commitments and contributions of business to racial justice and equality.[1] As this is written, almost five months have passed since the death of George Floyd, and the world is awash in public statements by businesses and their leaders, many of which were issued just days or weeks after Floyd’s death. If someone wanted to say something, he or she should have said it by now. Nonetheless, it is important to consider the process of “taking a stand” since words will be closely scrutinized and serve as foundational guidance for all the actions that follow.
Whether or not to take a public stance on political or social issues and on events such as those that have played out following Floyd’s death is often a difficult decision for companies, many of which are concerned about alienating certain groups of customers by associating their brands with “controversial” positions on sensitive issues that are dividing society. However, pressure from employees, consumers, and investors has been building in recent years for business leaders to explain where they stand and how their values are being incorporated into the decisions they are making about products, messaging, their treatment of their workers, and community relationships.
While there is a risk of losing those who may not agree with their positions, companies argue that taking a stand is a moral imperative and that the overall health of the business will improve over the long term as a result of building a stronger personal connection with employees and customers. Floyd’s death and the protests that followed marked a tipping point for many companies, pushing them to go on the record regarding racial injustice. As Netflix explained on Twitter: “To be silent is to be complicit. Black lives matter. We have a platform, and we have a duty to our Black members, employees, creators and talent to speak up.”
Unfortunately, we can be reasonably certain that the events surrounding George Floyd’s death will not be the last time that business leaders need to consider whether to “take a stand” and how it should be done. In those situations, businesses are understandably under pressure to respond quickly. However, it is important to avoid being too reflexive and making public statements that are not supported by solid research and thoughtful dialogue with the company’s own stakeholders. A good deal of the debate and dialogue on what governments, police departments, communities, and businesses should be doing in the wake of George Floyd’s death was focused on systemic racism and racial injustice. A review of the news makes it clear that these are, and will remain, much debated and highly contentious concepts in America. It is also apparent that there are political leaders who concede that Floyd’s killing was wrong while denying that systemic racism exists or is a problem.
While business leaders can, like any other citizen, weigh into that debate, their first obligation is to do the research on their own that is required for them to understand the potential flash points. The landscape is quite broad. Consider one well-known definition of systemic racism offered by Joe Feagin and used in sociology:[2]
Systemic racism includes the complex array of anti-black practices, the unjustly gained political-economic power of whites, the continuing economic and other resource inequalities along racial lines, and the white racist ideologies and attitudes created to maintain and rationalize white privilege and power. Systemic here means that the core racist realities are manifested in each of society’s major parts . . . each major part of U.S. society—the economy, politics, education, religion, the family—reflects the fundamental reality of systemic racism.
Additional arguments and empirical support for the existence of systemic racism and its adverse impact on people of color can be found in a wide range of sources, including surveys compiled by Balko and Cole.[3] Moreover, according to a poll published in June 2020 by Edelman, a public relations firm, nearly two-thirds of Americans, including 57 percent of whites, were “very” or “extremely” concerned about systematic racism. In addition, big majorities of both blacks and whites expressed hostility toward “performative activism,” or posturing in which companies made floury statements but failed to take meaningful actions. The respondents also made it clear that silence was not a good option: Over half of the whites surveyed expected brands to take a stand on racial justice, and over two-thirds of the Republicans who answered said a company’s response to the protests following the George Floyd killing would determine whether its brand kept or gained trust.[4] A June 2020 Harris Poll found that 82 percent of Americans thought that it was either “very” or “somewhat important” for companies to work on making a positive difference on racial equality, and sizable numbers of the respondents called on companies to incorporate their views into advertising, speak out on racial equality, do business with others that share similar standards when it comes to combating racial inequality, and contribute to organizations that combat racism. However, only 21 percent of the respondents to the Harris Poll felt that companies had actually made a “very positive” impact, and many in the survey called out companies for failing to do enough to increase diversity in their leadership or for making meaningful efforts internally to address racial equality.[5]
However, contrary views should also be sought out and considered in order to anticipate objections to actions that may be proposed by political, community, and business leaders. For example, in an essay on lessons for talking about race, racism, and racial justice, The Opportunity Agenda listed several “counternarratives” that commonly appear in discussions regarding racism: “racism is ‘largely’ over or dying out over time,” “people of color are obsessed with race,” and “civil rights are a crutch for those who lack merit or drive.”[6] An op-ed piece published in the Wall Street Journal on June 2, 2020, which was widely circulated on social media, agreed that police officers should be held accountable for using excessive force, but argued that there was no evidence of widespread racial bias.[7] Business leaders should not get too bogged down in arguing each of these points, but they do need to be mindful of what some others might be thinking as they set out to engage in meaningful conversations to develop responses that can be implemented with broad societal support. No statement will be universally accepted, since independent and scientifically based polling continuously identifies different perspectives and experiences between the members of different racial groups and disagreements among them regarding preferred policy solutions.[8]
In its guidance on talking about race, racism, and racial justice, The Opportunity Agenda counseled leading with shared values, including justice, opportunity, community, and equity, all of which are aspirations that should be universally acknowledged regardless of race. The purpose of this approach is not to avoid difficult discussions regarding race, but rather to focus on potential solutions. The Opportunity Agenda also recommended describing how racial bias and discrimination is a problem for everyone in society and prevents society from realizing its full potential. According to surveys cited by The Opportunity Agenda, eight in ten Americans believe that society functions better when all groups have an equal chance in life. Another way to increase engagement with the issues surrounding racial injustice is to remind others of instances in which they may have felt excluded. This is a powerful approach given that there is evidence that six in ten Americans have reportedly felt discriminated against at one time or another on the basis of race, ethnicity, economic status, gender, sexual orientation, religious beliefs, or accent.[9]
In his advice to CEOs and directors on how they can lead on racial injustice, Scott pointed out that, while words alone were not a sufficient response to the situation, a company’s stakeholders, from employees to customers to community members, expect that its leaders will speak out and clarify the company’s position. The tone and content of the messaging will vary, but it should be made clear that the company supports racial justice and is committed to taking tangible and measurable actions to embed equity and diversity into its organizational culture and the actions to be taken with respect to operations and relationships with stakeholders. Like others, Scott argued that statements from company leaders are important cues to everyone in the organization as to what will be expected of them and how they should act.[10]
Although business leaders certainly need to look inward to their own experiences and values while working on the company’s public position on racial injustice, and must settle on a statement that is aligned with their personal values, they need not work in a vacuum. The actions that the company ultimately takes in furtherance of its position will necessarily be a collective effort involving everyone in the organization. The CEO should create a special working group to develop the company’s initial action plans relating to racial justice, ensuring that there is diverse representation in the group who can understand the concerns raised by stakeholders and identify and implement solutions that will truly be seen as responsive by those who have been most pained by past experiences. In addition, leaders should reach out to others who can help them understand the underlying issues and provide feedback on the steps that might be taken in formulating and executing the company’s commitments. Scott recommended that business leaders (i.e., directors and CEOs) seek advice on handling racial inequalities from their peers at other companies, perhaps borrowing from initiatives that those companies have already launched to address the issues the company is facing. Companies should also be prepared to turn to qualified and experienced outside consultants and advisors to assist in the process, recognizing that existing internal expertise may not be sufficient.
The leaders’ initial public statements regarding the company’s position on racial injustice should be amplified in a series of internal events that allow leaders to meet face to face with people from all parts of the organization to discuss the stated position and solicit input on specific initiatives the company should take to fulfill its commitments. These events create an opportunity to reinforce the company’s position, providing employees with ideas about how they should act and the factors they should consider when making decisions during their day-to-day activities. This will also give employees a sense of participation in the process. Employees should be encouraged to share their own experiences of racial injustice, both inside the workplace and outside in the world they live in. However, because many employees may be uncomfortable holding these conversations in a group setting, it is important that the company develop processes that employees can use to share their experiences anonymously. Including people of color as spokespersons for the company’s racial justice initiatives lends credibility to the efforts. Yet, they should not be asked to defend or justify past missteps, nor should they be prevented from explaining their own pain and discomfort.
At the same time as leaders are meeting with employees, engagement should be continued with external stakeholders who can provide insights into how the company has been handling situations in which racial justice issues might arise. For example, consideration should be given to how the company has treated customers (e.g., have there been complaints of racial discrimination against customers, either in how products and services are provided or in the ability of people of color to readily access the company’s products and services?). Dialogue should be undertaken with legitimate representatives of community groups to understand how the company is perceived by those who live and work in the neighborhoods where the company operates. Investors should be consulted and are increasingly likely to insist that their portfolio companies establish and report on specific targets relating to diversity and inclusion. Business leaders should also reach out to partners up and down their value chains to understand their responses to the situation. There might be opportunities to collaborate with these partners on racial justice initiatives. Moreover, companies also need to be certain that they are not exposed to reputational damage from affiliation with businesses that engage in practices that undercut diversity and inclusion.
[1] Alan S. Gutterman is the Founding Director of the Sustainable Entrepreneurship Project (www.seproject.org), a California nonprofit public benefit corporation with tax-exempt status under IRC section 501(c)(3) formed to teach and support individuals and companies, both startups and mature firms, seeing to create and build sustainable businesses based on purpose, innovation, shared value, and respect for people and the planet. Alan is also currently a partner of GCA Law Partners LLP in Mountain View, California (www.gcalaw.com) and a prolific author of practical guidance and tools for legal and financial professionals, managers, entrepreneurs, and investors on topics including sustainable entrepreneurship, leadership and management, business law and transactions, international law, and business and technology management. He is the co-editor and contributing author of several books published by the ABA Business Law Section, including The Lawyer’s Corporate Social Responsibility Deskbook, Emerging Companies Guide (3rd Edition) and Business and Human Rights: A Practitioner’s Guide for Legal Professionals (Forthcoming Fall 2020). More information about Alan and his work is available at the Project’s website and his personal website at www.alangutterman.com. This article is adapted from the chapter on Racial Equality and Non-Discrimination recently released on the Project’s website: https://seproject.org/wp-content/uploads/2020/07/EDI-_C1-Racial-Equality-and-Non-Discrimination.pdf.
[2] J. Feagin, Racist America: Roots, Current Realities, and Future Reparations (New York: Routledge, 2010).
[3] R. Balko, There’s Overwhelming Evidence That the Criminal-Justice System Is Racist. Here’s the Proof, THE WASHINGTON POST (April 10, 2019), https://www.washingtonpost.com/news/opinions/wp/2018/09/18/theres-overwhelming-evidence-that-the-criminal-justice-system-is-racist-heres-the-proof; and N. Cole, Definition of Systemic Racism in Sociology, ThoughtCo. https://www.thoughtco.com/systemic-racism-3026565.
[4] The Great Awakening?, THE ECONOMIST (June 13, 2020), 49.
[5] Americans to Companies: Do More for Society (The Harris Poll), https://theharrispoll.com/americans-to-companies-do-more-for-society.
[6] Eight Lessons for Talking about Race, Racism and Racial Justice, The Opportunity Agenda (June 2020), https://www.opportunityagenda.org/explore/resources-publications/lessons-talking-about-race-racism-and-racial-justice.
[7] H. McDonald, The Myth of Systemic Police Racism, WALL STREET JOURNAL (June 2, 2020), https://www.wsj.com/articles/the-myth-of-systemic-police-racism-11591119883. See also R. Merry, What Is “Systemic Racism,” Really?, THE AMERICAN CONSERVATIVE (June 8, 2020), https://www.theamericanconservative.com/articles/what-is-systemic-racism-really.
[8] Poll: Americans’ Views of Systemic Racism Divided by Race (University of Massachusetts Lowell, September 23, 2020), https://phys.org/news/2020-09-poll-americans-views-racism.html.
[9] Eight Lessons for Talking about Race, Racism and Racial Justice, The Opportunity Agenda (June 2020), https://www.opportunityagenda.org/explore/resources-publications/lessons-talking-about-race-racism-and-racial-justice.
[10] M. Scott, Practical Tips: How CEOs and Directors Can Lead on Racial Injustice, CHIEF EXECUTIVE (June 5, 2020).