Why Racial Equity Audit Matters
Anna A. Tavis, Ph.D
Clinical Professor, Academic Director, Human Capital Management Department, NYU, SPS
The response to the tragic events and social justice movement in the summer of 2020 was overwhelming. However, companies’ well-intentioned statements would be purely performative if not followed by their actions. A year later, we are beginning to see how some companies are breaking the ranks with their corporate peers and move to action by addressing the issues at a systemic level. Black Rock, the world’s largest asset manager, is launching a racial audit at a request of a shareholder. In a recent letter to employees, Blackrock announced that they would conduct an external review of how its diversity, equity and inclusion policies impact stakeholders. The audit will start in 2022.
The first major US company to undergo such third-party racial audit was Airbnb. In 2016, Airbnb partnered with the Color of Change to launch a three year review of the company’s platform and their practices. Color of Change, US’ largest online justice organization issued a statement following the report’s findings. Rashad Robinson, Color of Change president In a statement praised the leadership of AirBnb for their commitment and effort in becoming a pioneer among their peer companies for addressing structural biases in their operating model. The statement also noted that more work needed to be done in the areas of off line and community relations.
Starbucks followed in 2018 after the incident at its Philadelphia store that started a national and international conversation about public displays of bias and its consequences. Collaborating with former U.S. Attorney General Eric Holder global training was conducted and a strategic set of commitments have been made.
In 2020, Facebook conducted its own racial equity reviews and created internal teams to “examine how Black and minority users are affected by the company’s algorithms as compared with white users”
The position of the major financial institutions has been markedly changing since the summer of 2020. CtW Investment Group responded to the events by openly requesting of major US financial organizations to launch racial equity audits to “identify, prioritize and remedy the adverse impacts of the bank’s policies and practices on non-white stakeholders and communities of color.”
With Black Rock still being an exception, most banks declined the external audit stating that they were already conducting initiatives that addressed these needs internally. Morgan Stanley, for example, shared internal plans for “an independent review of the global talent program, the creation of an Institute for Inclusion with an independent advisory board, and enhanced disclosures about the bank’s diversity and inclusion efforts”[1]
It is clear that this is just the beginning of a much longer journey to racial equity. Yet, the fact that major economic players take steps towards making systemic changes in the way they run their business marks the important transition from statements to action.