Workers & Investors Demand Businesses Fight Racism
This week, we talk about how the business world is under pressure to combat racial inequality.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Hi Maitane. Protests against racial injustice have rolled into the week and almost 60% of American voters are more troubled with the killing of George Floyd than violence at protests, according to a WSJ/NBC News poll. Many CEOs have spoken out and pledged tens of millions of dollars in donations to support racial equality, but now workers and investors are calling for businesses to do more. What are you seeing?
Some investors are asking companies in their portfolios to disclose data on pay equity and the ethnicity of their workforce and senior management. John Streur, the CEO of Calvert Research and Management, a responsible money manager with $21.5 billion in assets under management, said he will pressure companies the firm invests in to make information about their racial diversity public. He’s not alone: Change Finance, another sustainable investor with at least $19 million under management, sent a letter to the companies in its portfolios asking them to publish median racial and gender pay gap data and give nonwhite women access to the same jobs as men.
“When women, especially non-white women, lack opportunity, it is not only bad for them, it is bad for you and it is bad for us as investors,” investors at Change Finance wrote in the letter.
I wonder if more transparency will really lead to change.
Well, investors say transparency is a crucial first step. There’s a common phrase: If you don’t measure something, you can’t change it.
How about workers Dieter, do they have anything to say about how companies are responding?
Pressure is building inside companies. Some black employees at Nike, Estée Lauder and Adidas say the companies need to put more people of color in leadership. Three of Nike’s 13 board members are people of color, but there are none on its 10-member leadership team. Estée Lauder has two black women on its 14-person executive team and one black man on its 16-member board. Adidas doesn’t have any black people on its 6-person executive team or its 16-member board. In response to the backlash, all of the companies admitted they need to do more to boost diversity and inclusion. Estée Lauder detailed a plan to improve diversity and help the black community. Nike Chief Executive John Donahoe said he would create a task force to engage on racial diversity and decide where to spend the $40 million it pledged to the black community over the next four years. Adidas pledged to fill 30% of all new positions in the U.S. with black and Latino people and invest $20 million over four years in the black community.
You mention leadership teams, but the black community is under-represented in some entire sectors too. In the tech industry for example, black people account for less than 8% of core IT workers in the U.S., according to IT trade group CompTIA. Black tech executives say they hope conversations about racial disparities increase the number of black people who work in the sector.
Anything caught your eye in the stock market lately, Dieter?
Yes. Videogame companies have had a very good year so far thanks to global lockdowns. Stocks like Activision Blizzard and Electronic Arts have risen well above the broader market, but the trend could quickly reverse once more people head back outside.
What am I looking at? The chart above shows the year-to-date performance of three major exchange-traded funds invested in videogame companies, versus broader industry stocks in the S&P 500 index. Exchange-traded funds trade on markets in a similar way as individual stocks. They often carry lower fees compared with traditional mutual funds, which can be bought and sold only when markets open and close.
Interesting. Although after several months in lockdown, many people may be used to exercising at home and want to continue doing virtual workouts, especially if their employers organize virtual gym classes or pay for meditation services. During the pandemic, Hewlett Packard Enterprise is giving its workers access to Headspace, a mindfulness app. BlackLine, a financial software company, replaced gym-memberships subsidies for employees with virtual classes.
We will definitely keep looking out for new at-home work perks. Now let’s get back to our main topic: how companies are fighting racism. Last week, we asked our readers if they thought businesses had responded appropriately to the death of George Floyd. One reader said, “donating to charitable organizations isn't enough for large institutions and corporations to eradicate racial injustice” and companies should spend money on diversity initiatives and fund training, support groups and educational opportunities for employees.
That’s a good point. Now let’s open it up to our readers again: What steps, if any, do you think companies should take to address a lack of representation of people of color in corporate leadership?
Share your thoughts below or catch us on Twitter. Your words could appear in our next edition! Have a great weekend and remember to wash your hands. 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music, skateboarding and yoga (but I’m bad at both). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardomaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy
An insightful article on statistics of workers in large companies. Interesting to see the numbers associated with equality. Great to know about the video game impact on the stock market too. Thank you for writing this!