After the televised murder of George Floyd, systemic racism became front page news and led companies, investors, and consumers to acknowledge their roles in perpetuating racist policies and practices. While companies issued statements of support, investors and consumers began demanding corporate transparency and disclosure on racial and ethnic diversification. Companies have started to realize that heightened awareness of systemic racism, and corporate inaction, materially risks revenue growth and brand value. Conversely, promoting racial justice can increase profitability and competitive advantage.

Numerous studies document important corporate benefits come from racial justice policies. McKinsey found that companies with the most racial and ethnic diversity are 35 percent more likely to outperform industry medians. Companies with the most ethnically/culturally diverse boards worldwide are 43 percent more likely to have higher profits. For every 10 percent increase in racial and ethnic diversity among senior executives, earnings before interest and taxes grow 0.8 percent.

However, inequities in the workplace continue: people of color (POC) comprise 33 percent of entry level positions – but only 13 percent of the C-suite. Among companies in the Russell 3000, Black individuals accounted for only 4.1 percent of board members versus 13.4 percent of the U.S. population.

Our own research revealed troubling statistics, which prompted As You Sow’s Racial Justice Initiative, which is coordinating 2021 shareholder resolutions seeking more comprehensive diversity data.

Our Racial Justice Scorecards serve as the basis for corporate engagement, with a data-led initiative to motivate action. During our engagements, companies have been open minded while discussing racial justice. Since protests began last summer, companies have responded; many have expanded their diversity, equity, and inclusion efforts, beefing up outreach programs for employees and communities of color. They are still figuring out how to work most effectively, however.

Our work seeks to identify the best ways companies can create the needed internal and external change that consumers and investors want, to combat racist policies that hurt the bottom line.