After George Floyd’s murder in May 2020, stakeholders in public companies asked management and boards what they could do about racial injustice. Without any metrics to define best practices and separate leaders from laggards, there was no way to measure and therefore manage this critical social issue. To fill this gap, As You Sow developed two interlocking scorecards on Racial Justice and Diversity, Equity, and Inclusion (DEI) that cover the Russell 1000. We developed 57 Key Performance Indicators (KPIs) to guide companies on the path to achieve racial equity inside their organizations and establish a standard, supporting dozens of related shareholder engagements and resolutions.

The events of 2020 forced a broad reckoning for corporate accountability. When we began corporate dialogues using our scorecards on racial equity in the fall of 2020, many companies were hesitant to disclose DEI data and were struggling with terms such as ‘systemic racism’ and ‘anti-racism.’ Company representatives typically did not understand how these terms and concepts fit into their corporate sphere. Over the last two years, through our engagements and those of our allies, we have seen an increasing number of companies realize the importance of transparency on DEI metrics and policies. More also see a need for racial equity and civil rights audits to uncover deep workplace inequities, providing a basis for the corporate transition into a more just and equitable workplace.

As You Sow has filed 27 racial justice disclosure and reporting resolutions in 2022 and already has withdrawn eight. During our dialogue with companies throughout 2021 and 2022, two consistent responses emerged. Many companies acknowledged racial equity as a material risk and elected to use the scorecard metrics as a guide to achieve disclosure. Some proactive companies already had been building their DEI programs for years while others developed new internal policies they have yet to disclose publicly (some seeing it as a competitive advantage).

We have encouraged companies to develop and publicly disclose racial equity and DEI as material issues of concern to their investors and shareholders. In our withdrawals this year, companies have promised to make public detailed DEI metrics, including hiring, retention, and promotion rates by race, ethnicity, and gender, with details on internal programs.

Shareholder proponents filing racial justice resolutions have seen corporate attitudes evolve, shifting in a few years from quiet conversations behind closed doors to transparent public disclosure, buttressed by a desire for growth and change. Racial equity and DEI shareholder initiatives have educated companies on the vital importance of action and the impact on their brand, culture, and ability to attract and retain the best and brightest talent. This is emerging terrain; we plan to add more KPIs this year to broaden the theme of environmental racism and artificial intelligence bias. Racial equity and civil rights audits expand the scope of conversations and how we expect companies to address the intrinsic injustices that are built into their businesses. While companies are at different points on the path toward racial justice, shareholder engagements and clear metrics are providing guidance to keep them on track.