By Jackson Makl.
On May 25st, 2020 George Floyd, an unarmed Black man, was murdered by a Minneapolis police officer, who after handcuffing Floyd, pinned him to the ground with the weight of his knee on Floyd’s neck for more than nine minutes. Three fellow police officers looked on and did nothing even as Floyd cried out that he could not breathe and pleaded for his life. In the months following Floyd’s death, police departments nationwide were put under a microscope by the American people and the movement surrounding racial justice was given a renewed sense of urgency. As Black Lives Matter trended on social media for the first time since 2016, we also saw overwhelming response at the institutional level. At the time of this writing, the Data 4 Social Change team at I4DI has been able to pinpoint 639 different data points, each of which represents actions that organizations have taken to combat racial prejudice and inequity in our nation and abroad. This article will specifically highlight those data points which pertain to firms on the Dow Jones.
The Dow tracks thirty of the largest publicly traded companies on either the New York Stock Exchange (NYSE) or the Nasdaq. Its purpose is to give investors and the public at large an idea of the direction of the stock market at a glance. In the case of Black Lives Matter, the Dow serves a similar, but different purpose. By tracking the actions that these firms have taken to support our Black communities in this time of crisis, we can get a general sense of what the private sector as a whole is doing to combat the racism and discrimination that pervades American society and now amplified through social media and cell phone cameras
Of the 639 data points that our team has collected in the last 7 months, we have entered 29 attributed to companies on the Dow. These datapoints track 25 out of the 30 Dow Jones companies. Each datapoint is categorized by the type of action the firm took to bring awareness to or work against racial injustice. Of these 29 data points we found that 58% of firms on the Dow, recorded in our database, publicly contributed resources to Black Lives Matter and associated organizations, and 30% of the companies only publicly expressed solidarity towards Black communities via company websites or social media channels. Every company who contributed resources also expressed solidarity in the movement.
The highest contributor of resources, out of the 15 companies on the Dow who publicly contributed resources, was Apple with a $100 million dollar commitment to the Apple Racial Equity and Justice Initiative.
This initiative set forth also includes the construction of the Propel Center, a first-of-its-kind learning hub for Historically Black Colleges and Universities (HBCUs); an Apple Developer Academy to support coding and tech education for students in Detroit; and venture capital funding for Black and Brown entrepreneurs. Apple’s commitments aim to expand opportunities for communities of color across the country and to help build the next generation of diverse leaders.
Of the companies who did contribute resources, we saw an average commitment of $18 million.
But is it enough?
At face value, these numbers may seem encouraging, and that isn’t to say that the large amount of resources contributed to the movement is not powerful. They are. But the numbers become less impressive when you realize that, among these data points, only 10% of the companies actually committed to tangible institutional changes within their own organizations to address racism.
When we look at unemployment rates, poverty rates, wage gaps, and median household income, from the US House of Representatives, we see a staggering disparity between black and white America. In 2018, the poverty rate for black Americans was 61% higher than white Americans, the median household income for black Americans was 28.9K lower than that of white Americans; the wage gap between white and black Americans was 3% higher than it was 3 years after segregation ended in 1964, and the average black worker earned 48% less than the average white worker. Currently, it has been found that resumes with white-sounding names received 50 percent more callbacks than those with black-sounding names, indicating that, all other things being equal, considerable racial discrimination exists. Two key conclusions can be drawn from these statistics:
1. Systemic racism exists in our country, and 2. Systematic racism in America runs deeper than any amount of philanthropy can fix.
The most effective way we can truly begin to repair these inequities is by making changes to corporate structures and policies in place at the institutional level to ensure the success of our fellow black Americans. This is a sentiment shared by myself and the team at I4DI, and one that we hoped our research would prove corporate America shares. However, as noted above only 1/10 of Dow Companies in our database have exhibited such a commitment.
Perhaps companies on the Dow should look elsewhere for inspiration on how to mend this situation. Our research has revealed brighter examples of commitment to change beyond the Dow. Snap, for example, the creators of the popular social media app, issued this statement:
“Some of you have asked about whether Snap will contribute to organizations that support equality and justice. The answer is yes. But in my experience, philanthropy is simply unable to make more than a dent in the grave injustices we face. While our family has and will continue to contribute meaningfully to create opportunity for the underprivileged, and donate to the guardians of justice, these circumstances call for a more radical reorganization of our society. Private philanthropy can patch holes, or accelerate progress, but it alone cannot cross the deep and wide chasm of injustice. We must cross that chasm together as a united nation. United in the striving for freedom, equality, and justice for all.” (Snap)
Ahead of solidarity and resource contribution, organizational change is a crucial next step for corporate America for their racial justice initiatives to bear any real fruit. Organizational change is even more imperative when we take into account the actions taken by certain firms which have pushed black communities in the opposite direction.
During the housing crisis of 2008, Goldman Sachs, a firm listed on the Dow, invested enormous sums in subprime lending due to unceasing demand for high-yield, high-risk bonds backed by home mortgages. The banks made huge profits until the bottom fell out of the real estate market. A high number of the homes foreclosed upon during this time belonged to members of the Black community. These loans were often made without securing appropriate down payments or undertaking adequate investigation to ensure a home’s appraised value was more than the outstanding mortgage, which in many cases never should have been granted in the first place. The black community was disproportionately hurt by this fraud tactic used by these large banks, namely Goldman Sachs. The figure below, provided by the Center for Responsible Lending, shows completed foreclosures per 10,000 loans for African Americans, Latinos and non-Hispanic whites:
Now, when we look at the datapoint for Goldman Sachs post the death of George Floyd, we will see that the company created The Goldman Sachs Fund for Racial Equity to which they donated $10 million. They bolster this donation by being sure to add to their press release that this $10 million dollars sits on top of the $200 million Goldman Sachs has granted over the last decade to organizations serving communities of color. According to the US Justice department, Goldman was ordered to pay $1.8 billion to the communities affected by the securities fraud. So, while the fund may be legitimate, the firm was mandated to allocate a certain amount of resources every year, regardless, to minority groups in reparations for their part of the 2008 housing crisis. Therefore, it is widely speculated that this donation would be a part of this settlement.
On the other hand, when we look at a firm like Visa, also listed on the Dow, we will see a different story. In a memo released on June 3, VISA wrote:
“The pain, suffering and death of George Floyd is a terrible reminder of racism in America. A Black person should not be scared to leave their home, walk down a street, shop and enjoy the freedoms of our country. It has to stop. And it must stop. Social injustice and racial inequalities must come to an end.”
In addition to this sentiment and the resources they have donated in response to the movement, VISA has committed to changing their hiring practices. They pledged to increase the number of under-represented groups in VP and higher level positions by 50% by 2024. They also committed to increasing the number of under-represented colleagues overall within Visa by 50% in the next five years. By focusing on Black and African American talent, they will be able to drive early success and begin a shift in the perspectives regarding what corporate America looks like, which will inform further actions for other under-represented groups. This is only a small part of the multi-faceted, progressive plan the firm has set forth in their memo on July 16th, 2020.
We are heading in the right direction towards racial equality, but that will only take place with full transparency and institutional change from our nation’s largest corporations.
I4DI believes strongly that equality will not happen if organizations continue to side step tangible change within their own business practices. Eight months have passed since the death of George Floyd, and at this writing our data points show that a shift has begun; momentum cannot be allowed to stagnate and accountability is key.