Businesses’ Commitments to Racial Justice

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Discrimination on the basis of race is a fundamental human rights issue.  The UN Universal Declaration of Human Rights proclaims that all human beings are born free and equal in dignity and rights and that everyone is entitled to all the rights and freedoms set out therein, without distinction of any kind, in particular as to race, color or national origin. Unfortunately, despite all of the proclamations by the UN and other intergovernmental bodies, as well as specific laws such as the federal Civil Rights Act of 1964, racism remains one of the paramount human rights problems and threatens the livelihood and rights of millions of people in the US and around the world.  The death of George Floyd, a black man, while he was in the custody of the Minneapolis police department on May 25, 2020 set off days of large public demonstrations against racial injustice all around the world, often accompanied by vandalism and looting as well as disproportionate police responses that escalated the tensions.  At the same time, the US was in the grip of a health pandemic that was difficult for every American, but which created adverse impacts that had fallen disproportionately on blacks and other people of color.  Businesses, as they have done in the past in times of crisis, responded with statements of support and philanthropic contributions; however, many believe that more is required and that companies must commit to purging racism from the workplace and committing resources to help communities recover from the unrest and establish the social, economic and political conditions necessary for a just society.  Business leaders must seize the challenges and opportunities that have gripped society’s attention in the wake of the events of the first half of 2020 by taking a stand and making and fulfilling commitments to action across a broad spectrum of issues and contexts that includes embedding equality, diversity and inclusion in the boardroom, the workforce and all aspects of organizational culture; financial equity and security; community engagement; involvement in the public square through advocacy for racial justice and re-imaging products and services.  The following is an excerpt from the chapter on Racial Equality and Non-Discrimination just released on the website of the Sustainable Entrepreneurship Project.

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Discrimination on the basis of race is a fundamental human rights issue.  The UN Universal Declaration of Human Rights (“UDHR”) proclaims that all human beings are born free and equal in dignity and rights and that everyone is entitled to all the rights and freedoms set out therein, without distinction of any kind, in particular as to race, color or national origin.  The preamble to the International Convention on the Elimination of All Forms of Racial Discrimination (“ICERD”), adopted by the UN General Assembly in 1965 and entered into force in 1969, includes a reaffirmation that discrimination between human beings on the grounds of race, color or ethnic origin is capable of disturbing peace and security among peoples and the harmony of persons living side by side even within one and the same state.[1] 

Article 5 of the ICERD calls on states to undertake to prohibit to eliminate racial discrimination in all its forms within their borders and to guarantee the right of everyone, without distinction as to race, color, or national or ethnic origin, to equality before the law and enjoyment of an expansive portfolio of rights including, among other things, the right to equal treatment before the tribunals administering justice; the right to security of person and protection by the state against violence or bodily harm, whether inflicted by government officials or by any individual group or institution; political rights, in particular the right to participate in elections-to vote and to stand for election-on the basis of universal and equal suffrage, to take part in the government as well as in the conduct of public affairs at any level and to have equal access to public service; other civil rights including the rights to freedom of opinion and expression and peaceful assembly and association; and economic, social and cultural rights including the rights to work, to free choice of employment, to just and favorable conditions of work, to protection against unemployment, to equal pay for equal work and to just and favorable remuneration.

International human rights standards were originally written by states to create a framework and set of goals for governmental action and it was often argued that such standards did not apply to the private sector.  For many, the obligations of businesses with respect to the subjects covered by international human rights standards were limited to compliance with applicable national laws, even if those laws failed to meet international standards.  However, as time has gone by ideas have changed, albeit slowly, and there is now growing support for the notion that while the primary duty to protect human rights remains with national governments, businesses also have responsibilities to respect human rights in their operations.  The Preamble to the UDHR imposes duties to promote and respect human rights “on every individual and every organ of society”.  In 2011 the UN Human Rights Council endorsed the Guiding Principles on Business and Human Rights and Guiding Principle 11 states: “Business enterprises should respect human rights.  This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.”  Importantly, the official commentary to the Guiding Principles endorsed by the UN Human Rights Council makes the following clear: “The responsibility to respect human rights is a global standard of expected conduct for all business enterprises wherever they operate…[It] exists over and above compliance with national laws and regulations protecting human rights.”[2]  Businesses have also been called upon to contribute to the Sustainable Development Goals established by UN such as access to basic services, participation in decision making, full and productive employment and decent work, reducing income inequality, ensuring equal opportunity, promoting peaceful and inclusive societies, providing justice for all and building effective, accountable and inclusive institutions at all levels.

Unfortunately, despite all of the proclamations described above, as well as specific laws such as the federal Civil Rights Act of 1964, the US and other states have failed to fully implement the ICERD and racism remains one of the paramount human rights problems and threatens the livelihood and rights of millions of people in the US and around the world.[3]   In her book, “Caste: The Origins of Our Discontents”, Pulitzer Prize winning author Isabel Wilkerson wrote: “Our founding ideals promise liberty and equality for all.  Our reality is an enduring racial hierarchy that has persisted for centuries.”  She goes on to argue that racism in America is the byproduct of an unseen skeleton: a caste system that for centuries, even after the formal ending of slavery, has placed African Americans at the bottom rank in a societal hierarchy and repeatedly denies them respect, status, honor, attention, privileges, resources, benefit of the doubt and basic human kindness.  For her, the only way to fix the broken American house is to “tear out the plaster, down to the beams, inspect and rebuild the rotting lath” and “recast and reconstruct”.[4]

The death of George Floyd, a black man, while he was in the custody of the Minneapolis police department on May 25, 2020 set off days of large public demonstrations against racial injustice all around the world, often accompanied by vandalism and looting as well as disproportionate police responses that escalated the tensions.  As has often happened in the past when such incidents have occurred, businesses large and small were quick to issue statements through social media expressing their concerns about social justice and supporting the Black Lives Matter movement.  Many large and well-known brands made commitments to contribute substantial sums to social justice initiatives and supporting minority businesses.  For example, Softbank announced intentions to set aside $100 million for investments in ventures led by minority entrepreneurs and Visa created a $10 million fund for college-bound black students and agreed to guarantee jobs to those students who satisfied certain requirements.  However, a law professor who studies economic justice at Emory University complained in The New York Times that: “Most of these corporate statements were put together by the marketing team that was trying not to offend white customers and white employees … It’s complete B.S. It’s performative.”[5]  Other argued that the responses of a number of companies were “hypocritical” and “too little too late” and pointed to examples such as the following:

• While YouTube pledged $1 million to the cause, media watchdogs quickly pointed out that the platform, like Twitter and Facebook, has historically been slow to remove racist content. 
• JPMorgan Chase made it clear that it was “committed to fighting against racism and discrimination wherever and however it exists” even in the face of studies showing its home mortgage practices in Chicago were strongly weighted against black neighborhoods.
• Expressions of support for racial justice by large technology companies were challenged as being at odds with prior practices: Facebook has been criticized for discrimination against black employees and lack of diversity in the workforce; Amazon called for the end to “inequitable” treatment of black people, but the company has been long criticized for low pay, poor working conditions and ignoring the complaints of workers, particularly during the course of the Covid-19 pandemic, and called out for providing software to law enforcement agencies that has been misused to result in racial profiling (Amazon later announced that it would terminate its contracts with the police); and it has been reported that Google has significantly rolled back its diversity and inclusion initiatives to avoid being perceived as anti-conservative. 
• The first response of the National Football League was to express support for the demonstrations as a means for expressing “the pain, anger and frustration that so many of us feel”, but it had no answer as to why there was no place in the league for Colin Kaepernick after he peacefully expressed his principles before games.[6] 
• Even Nike, which created the controversial marketing campaign in 2018 around the Kaepernick situation and released a new message calling on people to stop pretending that “there’s not a problem in America”, was called out for a lack of diversity among its senior managers. 

Other companies, such as Target and Starbucks, steered away from specifically using the word “black” in their messages, preferring instead to refer to “a community in pain” and encouraging “courageous conversations.”  And, of course, there are companies that said nothing even though they had built substantial businesses by borrowing from black culture and targeting black consumers with their marketing campaigns.[7] 

Floyd’s death, which was quickly followed by the senseless killing of another black man, Rayshard Brooks, in a Wendy’s parking lot in Atlanta by a white police officer, was part of a seemingly endless series of high-profile violent events targeting African Americans (e.g., the fatal shooting of Ahmaud Arbery while on a jog, the killing of Breonna Taylor by police during a raid of her home, Eric Garner, Trayvon Martin and others), also occurred during a health pandemic that has been difficult for every American, although there is evidence that the adverse impacts had fallen disproportionately on blacks and other people of color.  For example, local governmental officials reported that job losses in New York City relating to the economic carnage associated with the Covid-19 pandemic have been much more dramatic among people of color: about one in four of the city’s Asian, Black and Hispanic workers were unemployed in June 2020, compared with about one of every nine white workers.[8]  There was understandably a longing among large swathes of the country to simply return to “normalcy”, the ways things were before the health crisis began.  However, the protestors and their supporters were sending a signal that the exclusion and disparity of the past would not be good enough and that the country and its businesses must brace and commit themselves to what would be a difficult but necessary path toward a “new normal” grounded in economic justice.  In fact, the president of the American Psychological Association argued[9]:

“We are living in a racism pandemic, which is taking a heavy psychological toll on our African American citizens. The health consequences are dire. Racism is associated with a host of psychological consequences, including depression, anxiety and other serious, sometimes debilitating conditions, including post-traumatic stress disorder and substance use disorders. Moreover, the stress caused by racism can contribute to the development of cardiovascular and other physical diseases.”  

Related to all this is the reality that almost all of the wealth generated in the stock market during the technology boom that played out in the years before the Covid-19 pandemic flowed to white families, with The New York Times reporting that Federal Reserve data has confirmed that typical black households had just one-tenth the wealth of typical white households.  There is never a good moment for any event that leads to protests on the scale that were seen in the days and weeks following the George Floyd killing, but the evidence is clear that the black community has realized little in the way of tangible benefits from pledges of equity from Corporate America and that it is time for businesses to finally make a meaningful impact in an environment in which fewer than half of black adults in America had a job, due in part to the devastation to the job market caused by the Covid-19 pandemic, and those black workers that did have jobs made less money than white workers due to the limited types of jobs usually available to blacks (i.e., low paying service jobs) and the failure of businesses to pay black workers the same amount that white workers were paid for the same work. 

Exacerbating the crisis is the prediction that 40% of black-owned businesses are not expected to survive the pandemic, often disappearing due to lack of business credit and personal savings that possibly could have kept them afloat until conditions improved.  It is important to realize that the comparable rate of shutdown for white-owned businesses was projected to be 17% and that the fate of black-owned businesses was much direr than in Asian and Hispanic communities where the shutdown rates were estimated to be 26% and 32%, respectively.[10]  Data published in an article in The New York Times indicated that small businesses in majority black and Hispanic neighborhoods would run out of cash faster and Ken Harris, the president of the National Business League, which was founded by Booker T. Washington in 1900, said that most black-owned small businesses “lack the capacity, scale and technical assistance to survive a pandemic” and that “black businesses often don’t have a traditional banking partner” that can help them tap into the complicated web of federal stimulus programs.[11]  As a result, black business owners often failed to receive the funding they requested.  All told, the sweeping failure of black-owned businesses as a result of the pandemic will almost certainly exacerbate already existing wealth gaps. 

An article in The Economist discussed the research of economic historians examining the history of and reasons for racial inequalities in the US, which began with the “original sin of slavery” and extended through sweeping events including the Civil War and the Reconstruction that followed and the so-called Great Migration during the 20^th century that began when millions of black families left the South for new opportunities in northern cities and then eventually crashed in the wake of white residents’ hostility to new arrivals.[12]  The article summed up the events leading to today as follows:

“A large and growing literature links the still-yawning racial gaps in income, employment and wealth to the segregated communities, racial violence and unequal investment that have been a feature of American society for so long.  The past, unfortunately, is not even past.  Black communities still face obstacles when casting ballots, differential treatment from the police, and unequal access to high-quality public goods, like education.  To make real progress toward racial equality in America, it is not just police behavior that needs to change.  The cycle of inequality and poor outcomes needs to be broken, and decades of damage remedied.”[13]

Darren Walker, the president of the Ford Foundation, criticized the traditional and predictable response of companies in the face of racism in a quote published in an article in The New York Times:  “The playbook is: Issue a statement, get a group of African-American leaders on a conference call, apologize and have your corporate foundation make a contribution to the N.A.A.C.P. and the Urban League … That’s not going to work in this crisis.”[14]  The same article led with the headline “Corporate America Has Failed Black America” and went to say: “… many of the same companies expressing solidarity have contributed to systemic inequality, targeted the black community with unhealthy products and services, and failed to hire, promote and fairly compensate black men and women”.[15]  Writing in the Harvard Business Review, Kramer noted that while taking a public position on social media supporting racial justice is laudable, and arguably overdue in many cases, he hoped that the tragedy in Minneapolis would lead to actions rather than just words from businesses.[16]  According to Kramer, surveys indicated that most Americans wanted businesses to respond to the unrest by purging racism from the workplace and committing resources to help communities recover from the unrest and establish the social, economic and political conditions necessary for a just society, and he argued that businesses had duties to act: 

 “We cannot pretend that most major corporations in America—and their shareholders—have not benefited from the structural racism, intentional inequality, and indifference to suffering that is behind the current protests. Corporate America and the Business Roundtable have an obligation to go beyond tweets and quotes by committing to an agenda that will advance racial equity in meaningful ways.”

Roberts and Washington argued in another Harvard Business Review article that businesses and their leaders—from CEOs at the top of the organizational hierarchy down to team managers on the frontline—could ignore the pain and injustice that people of color were suffering from police incidents and the Covid-19 pandemic and must act to overcome mistrust of authority and institutions and create an inclusive environment for everyone.[17]  They counseled business leaders to not remain silent in the face of all of the events, telling them that it was essential for them to convey care and concern and not appear to remain neutral with respect to situations of injustice.  They also reminded business leaders that they need to avoid being overly defensive, perhaps seeing comments regarding systematic inequalities as personal attacks.  They told business leaders that each person of color has his or her own unique experiences with racism that needed to be acknowledged and that they must commit to do their own research using reliable sources to understand the events in order to make clear decisions about the actions that their organizations should take.  Finally, Roberts and Washington called on leaders to affirm their employees’ rights to safety and personhood and help them feel protected and entitled to the space that they may need to work through feelings of anger, fear, disenchanted and disengagement from work.

While there has been sweeping and heated dialogue on the root causes of the economic and social problems confronting people of color and the consequences to society in general, many recall that they have heard a lot of this before, such as during the 1992 protests triggered by the acquittal of four white police officers who brutally beat Rodney King in Los Angeles, and worry that the compassion, anger and energy will eventually drift away.  Meaningful change takes a long time to occur in elected bodies and local police departments, particularly during a time when the country is so divided politically.  However, businesses have opportunities to act quickly if they can remain focused on creating and executing solutions within their organizations and business relationships.  While the principal victims of systemic racism are people of color, it is a problem for everyone to the extent that it erodes the fabric of society.  Moreover, as one of the observers quoted in The New York Times noted: “racial injustice and discrimination are forces that corrupt the corporate mission and core values of a corporation”.[18]

In an article written over a year before the death of George Floyd, Iyer and Kirschenbaum noted that even though the US was well on the way to a majority being people of color—this was expected to happen by 2045 and a majority of the young people in America were already of color—the situation was dire: “… a majority of people of color in the United States suffer worse socioeconomic outcomes in most aspects of their lives—health, education, career, access to financial services, or experiences with the criminal justice system—than their White counterparts”.[19] They went on to caution that “[i]f status quo remains, and a majority of corporate stakeholders such as customers, employees, and suppliers continue to experience racial inequities, then businesses will suffer from a less productive workforce, missed market segments and fewer suppliers from which to choose.”  Iver and Kirschenbaum urged companies to take to heart the results of research conducted by PolicyLink and FSG in 2017 that found that advancing racial justice could be a source of competitive advantage for businesses and that companies that failed to take into account the sweeping demographic changes taking place in America would miss out on growth opportunities.  In their view, companies needed to offer products or services that effectively met the distinctive needs of markets of color, work to reverse the effects of structural racism by strengthening their external business contest and ensure that their internal organizational conditions support this work. 

The issues surrounding racial injustice are complex and solutions will not be achieved quickly.  In fact, hundreds of years of trying have arguably had little impact.  However, prohibitions on discrimination against employees on the basis of race and other characteristics have been mandated by law for decades.  Title VII of the Civil Rights Act of 1964, which is usually referred to simply as “Title VII,” applies to any “person” engaged in an industry “affecting commerce” who has 15 or more “employees” for each working day in each of 20 or more calendar weeks in the current or preceding year, as well as to any agent of such a person.  Under Title VII, it is unlawful for an employer to fail or refuse to hire or to discharge any individual, or to otherwise discriminate against any individual with respect to compensation, terms, conditions or privileges of employment, because of that individual’s race, color, religion, sex, sexual orientation, gender identity or national origin. It is also unlawful for an employer to limit, segregate, or classify employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect an employee’s status as an employee, because of the individual’s race, color, religion, sex, sexual orientation, gender identity or national origin.

The frustrated people in pain are tired of waiting for politicians to act and are looking to the businesses that provide them with jobs, goods and services to take a leading role in create a more just society.  In the past, businesses have been reluctant to get involved and the argument was frequently made that market forces would eventually solve race problems facing American companies; however, in an article published in The Economist Walker dismissed this notion and called such views “naïve and in denial about the hold of racism on our culture, including our business culture”.   In the same article, a consultant argued: “It’s utterly unrealistic for anybody to bi-furcate a societal problem…it’s also a business issue because business exists in society, with employers, customers, suppliers and stakeholders”.[20]  Business leaders must seize the challenges and opportunities that have gripped society’s attention in the wake of the events of the first half of 2020 by taking a stand and making and fulfilling commitments to action across a broad spectrum of issues and contexts that includes embedding equality, diversity and inclusion in the boardroom, the workforce and all aspects of organizational culture; financial equity and security; community engagement; involvement in the public square through advocacy for racial justice and re-imaging products and services.  All of this will require more than just the usual changes to policies and training.  As pointed out by Kristine Sloan of StartingBloc, companies will need to commit to viewing every aspect of their operations through “a lens of inclusion”.  Walker did express some hope for progress: “The unprecedented convergence of health, economic and social crises has happened in a way that I am left feeling hopeful about corporate America realizing the potential of greater diversity.”[21]

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[1] Article 1(1) of the ICERD defined the term “racial discrimination” to mean “any distinction, exclusion, restriction or preference based on race, color, descent, or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic, social, cultural or any other field of public life”.

[2] https://www.business-humanrights.org/en/business-human-rights-a-brief-introduction

[3] A. Bradley, “Human Rights Racism”, Harvard Human Rights Journal, 32(1) (Spring, 2019).

[4] Quotes from Wilkerson taken from I. Wilkerson, “America’s Enduring Caste System”, The New York Times Magazine (July 5, 2020), 26, 33 and 53.

[5] D. Gelles, Corporate America Has Failed Black America, The New York Times (June 7, 2020), BU1.

[6] The evolution of the NFL’s public stance on racial justice issues was clearly impacted by changes in public opinion.  After the killing of George Floyd, a Yahoo News/YouGov poll in June 2020 found that a majority of Americans, 52 percent, approved of NFL players following Kaepernick’s lead and kneeling for the national anthem to protect police killings of African Americans, up from just 28% when the group conducted a similar poll in 2016.  J. Branch, “As Sports Return, It’s Time To Kneel and Be Counted”, The New York Times (July 5, 2020), 28.  In July 2020 it was announced that Kaepernick himself had signed a production deal with the Walt Disney Company, the parent company of ESPN, to develop content on race, social injustice and the quest for equity.  See K. Draper, “Kaepernick Signs a Production Deal With Disney to Explore Social Injustice”, The New York Times (July 7, 2020), B7.

[7] Numerous descriptions of businesses’ responses to the George Floyd killing and subsequent protests have been published and the discussion in the text is based on sources such as J. Bhuiyan, Tech companies say they support racial justice.  Their actions raise questions, Los Angeles Times (June 2, 2020); T. Hsu, Corporate Voices Get Behind ‘Black Lives Matter’ Cause, New York Times (May 31, 2020), https://www.nytimes.com/2020/05/31/business/media/companies-marketing-black-lives-matter-george-floyd.html; and How big business can stand up for racial justice: Show, don’t tell, Chicago Sun Times (June 5, 2020)

[8] P. McGeehan, “Calamity Looms in New York City Over Job Losses”, The New York Times (July 7, 2020), A1, A7.

[9] “We Are Living in a Racism Pandemic” Says APA President (May 29, 2020), https://www.apa.org/news/press/releases/2020/05/racism-pandemic

[10] K. Brooks, “40% of black-owned businesses not expected to survive coronavirus”, CBS News (June 12, 2020), https://www.cbsnews.com/news/black-owned-busineses-close-thousands-coronavirus-pandemic/

[11] L. Leatherby, “Black Business Owners Are Hit Hardest By Virus”, The New York Times (June 19, 2020), B4.

[12] Stony the road, The Economist (June 13, 2020), 62.

[13] Id.

[14] D. Gelles, Corporate America Has Failed Black America, The New York Times (June 7, 2020), BU1.

[15] Id.

[16] M. Kramer, “The 10 Commitments Companies Must Make to Advance Racial Justice”, Harvard Business Review (June 4, 2020), https://hbr.org/2020/06/the-10-commitments-companies-must-make-to-advance-racial-justice

[17] L. Roberts and E. Washington, “U.S. Businesses Must Take Meaningful Action Against Racism”, Harvard Business Review (June 1, 2020), https://hbr.org/2020/06/u-s-businesses-must-take-meaningful-action-against-racism?utm_source=linkedin&utm_medium=social&utm_campaign=hbr

[18] D. Gelles, Corporate America Has Failed Black America, The New York Times (June 7, 2020), BU1.

[19] L. Iyer and J. Kirschenbaum, How Companies Can Advance Racial Equity and Create Business Growth (April 8, 2019), https://www.fsg.org/blog/how-companies-can-advance-racial-equity-and-create-business-growth

[20] The great awakening?, The Economist (June 13, 2020), 49.

[21] Id. at 52.