Black History Month, which takes place in February each year, celebrates the successes and acknowledges the hardships of people in Black communities in Canada, the United States of America and the United Kingdom. However, our recognition of these people, events and culture should not be confined to one calendar month each year. Leaders should take opportunities to find ways to create a socially just world for all, all year-round.
Black people worldwide have had to fight for justice throughout history. That fight goes on today. Fairness is a result of action, the type of action that creates a world where people are not left behind. Unfortunately, the unequal distribution of wealth, opportunities and privileges has often kept black people out of the conversation. Here are some ways that Black people have been excluded over the centuries and how board directors and senior business leaders can help steer their companies in a more equitable and just strategic direction.
According to CBC News, Black and Indigenous People of Colour (BIPOC) represent more than a third (37%) of incarcerated people in Canada, but they are just 8% of the whole population. At the end of 2022, the Economic Policy Institute reported that black people had the highest unemployment rate, with a ratio of 6.1 to 1 for Blacks compared to Caucasians in the United States. This is not history; it is the present reality.
Many companies use an ESG framework to help them determine, analyze and manage their environmental, social and governance (ESG) risks and opportunities, including the impact on people. This framework usually consists of a company’s internal and external policies, procedures, and performance metrics regarding ESG factors. Most corporations employ an ESG framework as the yardstick for their ESG commitments and impacts.
However, the authors of these frameworks can sometimes include unconscious biases or simply be unaware of the impacts on different peoples or communities.
Designing an ESG framework strategically and mindfully can help promote social justice and equity for Black communities. An equity-oriented ESG framework can require that companies prioritize diversity and inclusion in their workforce and leadership positions, particularly for those communities that have historically been marginalized. For example, Salesforce met its goal to double the representation of Black people in their leadership roles (VP+) in the U.S. by the end of 2022.
Using a strong ESG oversight and governance framework will help boards and management understand how and when to speak and act for racial and social justice to meet the growing expectations of investors and other stakeholders. For example, Microsoft in 2020 started an initiative to support Black non-profit organizations with devices, software and advisory services to help them strengthen their operations.
Companies can use their ESG framework to address environmental racism and promote social justice. ESG frameworks with compulsory environmental impact assessments can help measure the environmental impacts of activities or projects within racialized communities. This will help corporations realize and act on potential negative impacts on projects in racialized communities and make wiser decisions. For example, Patagonia partners with community-based organizations to address environmental racism and promote environmental justice in areas where it operates. It has used its influence to advocate for policy changes that promote environmental justice.
However, if companies do not act strategically with their ESG frameworks, the impact becomes negative for those people who have been marginalized. On January 31 this year, protests were being held to keep Shell accountable for the damages caused by the production of fossil fuels on the African continent. When engagement with racialized communities is meaningful, especially regarding proposed projects, marginalized communities and countries can identify concerns and potential ways to maximize positive impact.
Having an ESG framework that is inclusive of marginalized groups has many upsides because those people from diverse backgrounds bring the perspectives, voices and representation of marginalized communities to the decision table. According to research published in Scientific American, including diverse people in company governance bodies helps increase innovation and revenue. A KPMG and African American Directors Forum study in 2021 found about 40% of Fortune 1000 companies had no Black directors. According to a 2021 report by The Financial Reporting Council, having a diverse and inclusive board increases creativity, encourages wider opinions and information and increases returns.
Research by Harvard Law School in November 2022 shows that the number of Black representation on boards has slightly increased, from 8.2 to 9.6 percent. However, this leaves room for improvement. The right ESG framework will require reporting on inclusive performance management with details on fairness and inclusive actions. An ESG framework committed to diversity and representation in corporate governance will impact communities and open unseen opportunities for corporations.
Companies should make a conscious effort to implement ESG frameworks that consider Black people and uplift them. Let us eradicate environmental racism, use the tools we have to fight social injustice, and embed diversity into good corporate governance. It should not always be the same lip service narrative for Black History Month; we should commit to doing better with our actions.
Stakeholders, including investors, are focusing more and more on ESG and sustainability issues and a board and leadership’s ability to manage these issues effectively. Having a strong ESG framework that does not exclude but recognizes the Black community can help you meet stakeholder expectations and go beyond.
Paa Boateng is Competent Boards’ Client Relations Lead and Program Coordinator. Follow Competent Boards on LinkedIn.Back To News & Views