By Ciara Linnane
JPMorgan Chase & Co. made the biggest racial-equity commitment of any U.S. company in the aftermath of George Floyd’s murder in May of 2020, promising to spend $30 billion over five years to close the wealth gap for communities of color. The bank now says it has made substantial progress — while some critics say it hasn’t gone far enough.
By the end of 2021, the bank (NYS:JPM) had deployed or committed more than $18 billion of that sum, focusing on increasing homeownership, expanding affordable rental housing, supporting minority-owned small businesses, diversifying its supply chain and creating more opportunities for its employees of color, as chief executive Jamie Dimon outlined in his annual letter to shareholders earlier this year.
Dimon was vocal in 2020 in condemning the unfair treatment of people of color in the United States.
“Systemic racism is a tragic part of America’s history,” he said in announcing the $30 billion commitment in October 2020. “We can do more and do better to break down systems that have propagated racism and widespread economic inequality, especially for Black and Latinx people. It’s long past time that society addresses racial inequities in a more tangible, meaningful way.”
JPMorgan’s Black employees accounted for 14% of the overall workforce by the end of 2021 — more than the 13% of the overall U.S. population that Black people represent, and up from 13% of JPMorgan’s workforce at the end of 2020.
Hispanic employees accounted for 20% of the workforce, unchanged from 2020, and Asian employees accounted for 17%, up from 16% a year earlier.
“More women were promoted to the position of managing director and executive director in 2021 than ever before, we doubled the number of employees who self-identified as LGBT+ around the world and launched a differentiated global strategy for neurodiversity within our Office of Disability Inclusion,” the company said in a statement.
Brian Lamb, who until recently was JPMorgan’s global head of diversity, equity and inclusion, said much of the work on the fund has come down to serving communities that historically have been left behind. It starts with addressing factors that are tied to creating more prosperity, improving financial literacy and access to quality education, getting access to capital lending and homeownership, and understanding the needs of local communities, he said.
“That means developing relationships with Black leaders and other partners and ensuring there are branches or outlets where people of color live and work,” Lamb told MarketWatch in an interview.
But critics of JPMorgan have homed in on the bank’s reluctance to agree to a full independent racial-equity audit that would examine the impact the bank’s past practices have had on Black communities and other communities of color.
‘Limited in scope’
At the bank’s 2021 annual shareholder meeting, Dimon dismissed a shareholder question on the issue by saying it would be a complete “waste of time,” insisting that the bank would not pay an outside firm to measure what it already planned to track and disclose.
“We don’t need one [an audit]; we’re not getting any value and it just adds another layer of bureaucratic fluff,” Dimon said at the time.
Dimon has since reversed course, promising an audit later this year that will be limited to the $30 billion commitment. The lengthy battle to change his mind is “baffling,” said Dieter Waizenegger, the executive director of SOC Investment Group, a group that seeks to hold companies and their leaders accountable for corporate behavior.
“Jamie Dimon is out there taking a knee and made this big commitment,” he said, referring to the occasion in June 2020 when Dimon dropped to one knee along with other staffers at a branch in Mt. Kisco, N.Y., emulating the stance taken by some Black athletes to protest racism. “But then when there was this resistance to an independent third party taking a look under the hood, we were really surprised.”
Other critics charge that as head of the Business Roundtable, Dimon could have inspired others to engage more fully with the financial-services industry’s racial inequities and discriminatory practices that have long hurt people of color, as Black activists have urged.
“While this audit is limited in scope, stakeholders like ourselves and employees will not be satisfied until the bank examines the impact of its policies, procedures and products, including its employment practices, its lending policies and underwriting policies on Black and other marginalized groups,” wrote Marc Bayard, an associate fellow and the director of the Black Worker Initiative at the Institute for Policy Studies, and Saqib Bhatti, the co-executive director of the Action Center on Race and the Economy, in a recent op-ed for Blavity, a digital media company for Black millennials.
They noted that Dimon also refused to sign a commitment put forward by a coalition of companies last year opposing “any discriminatory legislation or measures” that restrict voters from casting a ballot, despite requests from senior Black business leaders. The statement, published with some fanfare in the New York Times and other publications by the Black Economic Alliance, was titled “We Stand for Democracy.” It was led by former American Express CEO Ken Chenault and then Merck CEO Ken Frazier, both of whom are Black.
JPMorgan declined to comment on the racial-equity audit issue, but referred MarketWatch to an update highlighting all of the changes that have come about since it committed the $30 billion.
As for Dimon’s refusal to sign the voting-rights commitment, the company said at the time that it had made its own “strong statement last month about the critical importance of every citizen being able to exercise their fundamental right to vote.” Dimon has also said publicly that “voting is fundamental to the health and future of our democracy, and that “voting must be accessible and equitable.”
“We regularly encourage our employees to exercise their fundamental right to vote, and we stand against efforts that may prevent them from being able to do so. We are a stronger country when every citizen has a voice and a vote,” he said in March.
Partnerships, suppliers and lending
To be sure, JPMorgan has upped its game since 2020 when it comes to serving and promoting people of color. In an effort to add more Black executives to its staff, it expanded its partnerships with Historically Black Colleges and Universities to 17 schools across the U.S. That was up from three HBCU partnerships previously, according to a bank spokesperson.
The bank spent an additional $155 million with Black, Hispanic and Latino suppliers in 2021, more than double its first-year spend goal. That boosted the number of suppliers from those communities by more than 40% from 2020.
The bank also approved roughly $13 billion in loans to create — and maintain — more than 100,000 affordable housing and rental units, recognizing that historically discriminatory housing policies and lending practices have made homeownership less attainable for many people of color.
It hired more than 150 community home lending advisers to help create a community and affordable home lending business, and extended a $5,000 homebuyer grant to cover the closing costs for homes bought in 6,700 minority neighborhoods across the U.S.
And to boost small businesses, the bank added 25 “diverse senior business consultants” to coach business owners in 141 cities and to mentor more than 1,000 companies. It paid more than $100 million to acquire equity stakes in 16 financial institutions that serve about 90 communities of color in 19 states and the District of Columbia.
‘We all wanted to move faster’
For Lamb, Floyd’s murder was a wake-up call. “The country was divided and we realized our employees needed us the most at that moment,” he said. “I saw it as a tremendous opportunity to lean in and quickly mobilize to make sure our employees had support to manage through.”
The bank understood the moment had implications for its clients, too, and had come at an already difficult time with the coronavirus pandemic still raging.
“The shared frustration was the pace of change,” said Lamb. “We all wanted to move faster and to see material changes faster. But we’re a high-performing firm at JPMorgan and we wanted to get it right. We wanted it [to] have purpose and be sustainable.”
To measure the success of the program, the bank set metrics relating to transparency and accountability, and checklists asking if it was creating opportunities for women, for example, and whether they were reaching the most senior level.
“We’ll continue to track those metrics and they’ll be part of compensation,” said Lamb, who has a new role in JPMorgan’s commercial bank, where he will be head of middle-market banking for the Northeast.
The bank has not found itself having difficult conversations with its white workers when promoting candidates of color into more senior roles, the executive added.
“We’re fortunate that our leaders or managers, if not in a diverse group, have a significant focus on being an ally and recognize that’s a key role,” Lamb said. “It’s not about awkward conversations but about being culturally competent and helping all managers be inclusive leaders and create equality.”