By Tonya Garcia, MarketWatch
Protesters and politicians aren’t the only ones making their voices heard on the issue of racial justice in the U.S. following the killing of George Floyd, and many other black citizens, at the hands of the police.
Corporations of all stripes have also been issuing public statements in support of racial equality, a topic that, for a long time, all but a select few would speak on. However, corporate statements could lead to backlash if they aren’t followed by actions that aid progress, experts and activists say.
From the quiet clip from Nike Inc. (NYS:NKE) , to the email message from Madewell, to the clarion call for an end to white supremacy from Ben & Jerry’s, companies are making more public statements about societal issues, a shift that comes as the result of the increasingly influential place that companies, particularly consumer companies, hold in society.
Robert Foehl, executive-in-residence for business law and ethics in the College of Business at Ohio University, says Citizens United was a significant moment that established companies as members of the American community with a greater responsibility than making sales and driving profits.
Citizens United v. Federal Election Commission was the Supreme Court case decided in January 2010 that gave corporations and other groups license to spend unlimited amounts of money on political elections. The ruling reversed campaign finance restrictions that had been in place for 100 years.
“That was seminal to where we are today,” said Foehl. “What we’re seeing is a more obvious display that corporations are embracing the vital role they play in society. There’s an argument that they’re the most powerful and influential groups in society today.”
For some companies, just making a statement is a big leap forward. And Foehl warns that we should leave room for companies to make missteps along the way.
However, these statements must have action in support of these words.
“Corporations can use their best efforts by engaging with stakeholders; sit down and determine what is the best course of action,” he said. “It might be about committing money and volunteer hours. It could be HR policies to make sure they have appropriate diversity practices and accountability.”
Nike, which has opened itself up for backlash with its continued support of Colin Kaepernick, is one company that many would hold up as an example of a corporation that has risen to the challenges of fighting for racial equality.
But even Nike falls short, says one activist.
“No one should be going to work at a multibillion-dollar corporation and wondering how they’re going to pay their rent,” said Jade Magnus Oggunaike, senior campaign director at racial justice organization Color of Change.
The average salary for a retail sales associate at Nike is $12.12 per hour, according to Indeed.com . On the company’s e-commerce site, there’s a listing for the Air Jordan 6 Retro shoe coming soon with a $190-per-pair price tag.
Diverse workforces at corporations
While many on social media and elsewhere have turned their eye toward the lack of diversity among the upper ranks at companies, Oggunaike says a company must ensure fairness and opportunity throughout the organization.
“Black people in positions of power is a good thing but not the only thing,” she said.
These corporate statements of support are “largely symbolic” to Oggunaike, noting the “failures” of governments and corporations with relation to the needs of Black people. Going beyond police brutality, she notes the disproportionate impact that the COVID-19 pandemic has had on the Black community.
“With high unemployment, who has money to spend?” she said, calling for economic justice as well as other forms of equality. “Raise wages for workers. We’re looking at the way people are living in the world and that’s what impacting what’s happening now.”
Consumers are holding companies accountable
In tandem with the growing influence that corporations have is the growing belief among consumers that the companies they do business with should reflect their values. Many consumers see corporations as groups that can step in and address societal issues where other institutions can’t, according to J. Walker Smith, chief knowledge officer of brand and marketing at Kantar.
“They want to see brands do something,” said Smith. “Use their institutional weight and authority to make a contribution to the communities in which they operate.”
Smith notes that when the coronavirus pandemic began, companies quickly turned to action, donating money, making face masks, and taking other measures to help fight the illness.
“You need to think about what your duty is to your stakeholders,” Smith says, noting that stakeholders includes a variety of people and groups with different interests and backgrounds. “Measuring up to the expectations of your stakeholders sometimes takes you to societal issues.”
This may be even more of an imperative for consumer companies that come in close, oftentimes intimate, contact with consumers.
“These are companies that are looking at consumers on a daily basis and they’re trying to understand the full panoply of values and lifestyles that make up people’s lives,” Smith said. “Consumer companies are closer to people than other types of businesses.”
Businesses stepping up
It looks like business leaders are getting the message. For example, Target Corp. (NYS:TGT) has pledged $10 million to civil rights organizations like the National Urban League and 10,000 hours of consulting services to small businesses owned by people of color in the Twin Cities.
And Business Roundtable’s Chairman Doug McMillon, who is also Walmart Inc.’s (NYS:WMT) chief executive, has created a special committee with the goal of finding solutions to the nation’s racial inequality.
The committee includes Mary Barra, chief executive of General Motors Co. (NYS:GM) , Jamie Dimon, chief executive of JPMorgan Chase & Co. (NYS:JPM) and Alex Gorsky, chief Executive of Johnson & Johnson (NYS:JNJ) .
Among the issues these executives plan to tackle are disparities in early childhood and K-12 education, access to capital in minority communities and criminal justice reform.
“We need to remember that free market capitalism has been an unquestionable source of tremendous good for society and humanity,” said Ohio University’s Foehl. “But that doesn’t mean free market capitalism doesn’t have its warts. The idea here is that corporations are engaging in meaningful CSR [corporate social responsibility] programs that help with managing those warts.”
Business Roundtable shocked many last year when it moved away from its shareholder-focused mission and said its statement of purpose should include all stakeholders, including workers.
Now, McMillon said in a statement on behalf of Business Roundtable, there needs to be “real change” on these issues of racial inequality. Walmart announced on Friday that it is committing $100 million over the next five years to address racial equity.
“Business Roundtable CEOs do not have all of the answers,” McMillon said. “But we are committed to doing our part to listen, learn and to use our collective influence and scale to advance racial justice and equal opportunity for all Americans.”