Introducing the Corporate Racial Equity Advantage

Angela Glover Blackwell, Founder and CEO, PolicyLink
Mark Kramer, Founder and Managing Director, FSG

Now, more than ever, the future of America depends on equity—just and fair inclusion into a society in which all can participate, prosper, and reach their full potential. The private sector is the next frontier for the equity movement, and racial equity is the next frontier for corporate America. That is why PolicyLink and FSG are teaming up to develop the Corporate Racial Equity Advantage, the first comprehensive tool to guide companies in assessing and actively promoting equity in every aspect of their business operations and strategy.

The goal is to show the private sector that a company’s bottom line can be advanced by adhering to equity policies and practices that benefit underrepresented and marginalized populations who have been excluded from the economic mainstream.

We are entering a moment of historic challenge. The incoming president was elected, in part, on the wish that the growing racial and ethnic diversity in America should be ignored. But wishing doesn’t make it so. Vast segments of our economy, such as our hospitality industry, food systems, delivery services, and caregiving for the elderly, depend on the millions of people of color—many of them undocumented immigrants—whose labor drives the nation’s prosperity. By mid-century the majority of Americans will be people of color. If this country is to continue to prosper in the coming decades, under any political leadership, we cannot afford to leave behind most of our workforce, consumers, and voters.

Community-based organizations and coalitions have made significant progress in articulating a bold and nuanced vision of equity, building a broad, determined movement to achieve it, and advancing policies to get there. At the same time, there is a growing economic consensus that the social and economic inequality, wage stagnation, and stalled economic mobility that disproportionately affect communities of color, are a drag on U.S. competitiveness. Racial economic exclusion is a market failure.

Many business leaders recognize that equity and inclusion are essential for U.S. growth and prosperity. They understand that they will have a skilled workforce only if all people have the full opportunity for education and career success. They know that their products and services must meet the needs of a changing population if their businesses are to thrive.  And they know that diversity is important to America’s global competitive advantage.

What companies often do not realize, however, is just how big a role they can play in creating an equitable society and how big a role equity can play in delivering greater profitability. The equity movement has not been accustomed to speaking in business terms, but in the absence of strong government support, companies may become our strongest allies.

In short, it is time for businesses to tap their remarkable capacity for leadership and innovation to create an economy that works for all Americans. The Corporate Racial Equity Advantage will propel and support that effort. This tool will be the first to address a company’s overall impact on low-income and marginalized populations.

A number of indices already rate corporations on diversity, ethical business practices, sustainability, or social responsibility, yet these rankings can mask a company’s true impact on equity. In one example, a large international bank that ranked high in a well-established diversity index opened millions of unauthorized accounts that incurred fees and sabotaged credit ratings by specifically targeting low-income and elderly clients.

We aim to help companies understand the full measure of their equity footprint beyond the conventional metrics of workforce diversity, corporate governance, and philanthropy. We will consider the impact of a company’s training, compensation, and promotion practices, its products and services, marketing and sales, procurement practices, community engagement, and lobbying efforts.

The Corporate Racial Equity Advantage will be developed with input from both the corporate and equity communities. Our goals are to identify companies that benefit from creatively furthering equity, share promising examples and lessons learned, and establish pathways that enable more companies to achieve both equity and prosperity. In the coming months, we will recruit corporations, NGOs, and community groups to join us in designing, refining, and testing this tool.

PolicyLink and FSG have chosen to undertake this project as a partnership because it allows each of us to take our work where we’ve long known it needs to go. PolicyLink has been at the forefront of the movement to advance equity through policy and systems change. Yet while resetting society’s rules and reprioritizing government investments are critical to reducing racial and economic inequity, PolicyLink has always recognized that the private sector must also change, and do so from within.

So too, FSG has long understood that the success of a business depends on the health of the society in which it operates. For the past 16 years, FSG has worked with major corporations around the world to create shared value by identifying the business opportunities embedded in society’s most urgent needs. FSG’s Shared Value Initiative has further engaged hundreds of leading corporations to learn from each other about the convergence of corporate and societal success.

Together we have both deep roots in communities and strong relationships with corporate leaders. We understand that these two spheres, so often viewed as worlds apart, are wholly interdependent. We hope to leverage the power of the private sector to advance an authentic equity agenda, building on the wisdom, voice, and experience of communities, and lessons learned from decades of advocacy and activism to ensure opportunity for all. At the same time, we hope to show corporations how a full embrace of equity can expand their markets, increase their profits, and create a competitive advantage.

As we design the prototype of the Racial Equity Advantage over the next 15 months, we will keep you regularly updated on our progress. We welcome your thoughts and suggestions. Please send us an email at mark.kramer@fsg.org or angela@policylink.org.