George Floyd’s life was slowly slipping away under the knees of a Minneapolis police officer one year ago today.
The ensuing outpouring of rage and empathy rocked Corporate America to its core in unprecedented ways, but experts say it’s far too early to tell whether the business world’s pledged commitments to long-term social change will hold up.
“Change was never going to happen overnight,” said Rashad Robinson, president of Color of Change, a private-sector racial justice organization. “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 assassination transformed Black Lives Matter from a divisive social justice movement to a near-universal corporate mantra almost overnight. After decades of resistance, Fortune 1000 companies invested billions of dollars in programs to address systemic racism and committed to meeting quantifiable racial hiring quotas.
After co-founder Alexis Ohanian resigned and requested to be replaced by a Black person, Reddit appointed Y Combinator Managing Director Michael Siebel to the company’s board of directors in June. JPMorgan Chase announced in October that it would invest $30 billion over the next five years to promote racial equity. Bank of America, Citi and Goldman Sachs made similar, billion dollar pledges.
Last year, the Local Initiatives Support Corporation, the nation’s largest community development financial institution, set a new fundraising record, allowing it to invest $2 billion in historically underserved rural and urban communities.
“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.”
However, Marcus believes that addressing America’s racial wealth disparities will take more than a year of funding. According to a Brookings Institute study published in December, closing the racial wealth gap between Black and White US households would cost more than $10 trillion.
According to a recent report by consulting firm Creative Investment Research, only $250 million of the estimated $50 billion pledged to racial equity causes by US companies in the previous year has 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 companies have also made significant strides in diversifying their executive suites and boardrooms. Nasdaq CEO Adena Friedman proposed a new rule in December requiring companies listed on any NASDAQ-owned stock exchange in the United States to disclose “consistent, transparent” board diversity statistics. Most NASDAQ companies would also be required to have, or explain why they do not have, at least two “diverse” directors on their board, which could include one woman and one member of a “underrepresented” minority group.
The Securities and Exchange Commission in the United States has postponed a decision on the proposed rule until later this year, giving the public more time to comment.
According to Mike Hyter, president and CEO of the Executive Leadership Council, a national organization for current and former Black CEOs and senior executives, most of those diversity gains have gone to women and Latinos, not Black Americans.
According to data released in April by the Latino Corporate Directors Association, US companies added 82 Latinos to their boards of directors between January and March, a 331 percent increase from the same period in 2020.
According to Bloomberg, 145 S&P 500 companies have added at least one Black director to their board of directors since last June, while the number of Latino board members has quadrupled since a year ago. For the first time ever, women now account for roughly one-third of all S&P 500 board seats, according to the news outlet.
“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 stressed the importance of companies committing to independent diversity audits rather than simply 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.”