Companies will need courage to keep their promises on race
We made a promise. Shocked into action by the murder of George Floyd, the business community vowed action on racial injustice in the workplace. But a year on, are we keeping that promise?
We’ve certainly made progress. Almost every fellow CEO I speak to appears genuine in wanting to lead companies that look more like their communities. They are reconsidering their hiring practices, challenging unconscious bias, and reaching out to minorities in and outside their organizations.
However, these measures aren’t enough on their own. To make real headway companies will need to open themselves to public, shareholder, and broader scrutiny. That means disclosing what they look like today, not just talking about what they want to look like tomorrow.
No doubt many PR professionals would advise caution—particularly if their clients’ data on racial composition is typical of the broader Fortune 500. Analyzing Refinitiv’s ESG database, we found that, on average, Black Americans account for just 5% of manager positions in the 80 Fortune 500 companies for which data were available, compared with a 13% share of the broader U.S. population (according to U.S. Census data). Hispanics and Latinos held just 6% of manager positions against an 18.4% share of the population.
Publishing these kinds of numbers takes guts. But it is an important step toward making meaningful progress. PwC’s U.S. chair Tim Ryan put it nicely at a recent Fortune webinar when he said, “Don’t be ashamed of your numbers, they are what they are. What’s important is progress.”
I could not agree more, and as we learned with the focus on gender, what gets measured gets managed. That’s why LSEG (Refinitiv’s parent company) is disclosing its own data as well. It shows that only 3% of our managers in the United States are Black, while just 5% are Hispanic. Clearly these numbers are not good enough, which is why we are also setting racial diversity targets as an organization and why will be disclosing our progress against them regularly.
Raising the bar for disclosure
Across the Fortune 500, disclosure is a work in progress. Of the full 500 companies, 262 reported some level of race and ethnicity data in their most recent reports—meaning that 238 did not. Being an optimist, I’d call that a step forward, and unquestionably U.S. companies (which by law have to collect this data) are some distance ahead of foreign peers, most of whom do not.
That said, the number of companies willing to disclose granular data is disappointing. For example, while a company might publish data on “underrepresented minorities” as a block, that data would hide the fact that (based on our sample) an American born to ethnic Asian parents in the U.S. is almost six times more likely to become a manager than someone born to Black parents. And even within the broad category of “Asian,” some national origins will be much better represented than others in the managerial ranks. Granular data is vital in building a nuanced picture that can then led to a nuanced response.
According to our most recent data, only 18 Fortune 500 companies provided the fullest breakdown of their U.S. workforce (across Black, Hispanic, Asian, and Other minorities, and the proportions of these groups in the workforce, management, and board, plus racial pay gap data). Kudos to the companies that did, therefore: Air Products, Allstate, Amazon, American Express, Bank of America, Bank of New York Mellon, Citigroup, Estée Lauder, Intel, JPMorgan Chase, Microsoft, Nike, Target, Owens Corning, UnitedHealth, Verizon, Visa, and Wells Fargo.
Every Fortune 500 company can disclose this data—indeed, every company worldwide can disclose it through Refinitiv’s publicly available contributor tool—but we wanted to make it easier. That is why Refinitiv and Fortune have created a simple methodology and mechanism for companies to self-report. We’re calling it Measure Up.
The data reported through Measure Up offers companies insight on where they need to focus in building a more balanced workforce, but that’s not all we’re doing with the data. From today, Fortune readers can use it to filter the annual Fortune 500 list based on a company’s level of inclusivity. Fortune is also publishing a brand-new list, the Most Progressive Companies on Racial Inclusion, based on this data, and over time Refinitiv will add data from other countries to the U.S. data that’s already in our ESG database.
The business case for disclosure is overwhelming, and we believe there is a huge reservoir of goodwill awaiting those who do open up.
Demand is strong. In the past 12 months Refinitiv has seen a surge in usage of data and analytics in this area as asset managers and others use it as a basis for investment decisions. Customers are looking at ESG performance in deciding where to spend. Banks are looking at ESG criteria to make lending decisions. And every CEO is aware of the millennials and Gen Zers deciding where to work based on companies’ ethical standards.
It takes courage to disclose this data, but if companies are serious about ending racial injustice, I don’t see that they have a choice.
We have a promise to keep.
David Craig is CEO of Refinitiv and group head of Data & Analytics at LSEG.
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