In one fell swoop, a supermajority of judges voting to limit the consideration of race in admissions processes undid years of work to address the persistent racial inequalities baked into our societies.   

But the decision has sparked another crucial debate, casting a long shadow over current efforts to enhance workplace diversity and, by extension, representation. Already, experts have warned of the chill effect the Supreme Court’s decision may have on diversity programs across the corporate landscape. 

Affirmative action acknowledges that historical and systemic disadvantages have hindered the progress and opportunities of racialized groups. By recognizing the impact of race on one’s experiences in various contexts, including the workplace, affirmative action plays a vital role in the journey to equity and justice. Affirmative action is not a tool for reverse discrimination but rather a means to create a more equitable and just society. 

Limiting the consideration of race in admissions and hiring processes perpetuates the fallacy of a colourblind society. As Associate Justice Ketanji Brown Jackson wrote in her dissent, “With let-them-eat-cake obliviousness, today, the majority pulls the ripcord and announces, ‘colorblindness for all’ by legal fiat, but deeming race irrelevant in law does not make it so in life.” 

This is the same Ketanji Brown Jackson who was told by her high school guidance counsellor that Harvard University was too high a goal. The same Ketanji Brown Jackson who then went on to graduate from Harvard magna cum laude and later became editor of the Harvard Law Review. Jackson’s story is a testament to the challenges faced by racialized people, particularly racialized women, in securing employment and advancing in their careers. Racialized people are likely to endure more rigorous interview processes, heightened scrutiny of their qualifications, and pay inequities that persist throughout their entire careers. When they do move into executive positions, they encounter additional obstacles as they use their roles to challenge systemic barriers to make space for equitable allocation of opportunities. 

Roanne Weyermars, vp of communications public affairs and EDI at Coast Capital Savings, astutely points out that while the ruling has triggered a flurry of statements from corporations pledging steadfast commitment to championing diversity, equity, and inclusion “we have also very recently seen a flurry of diversity leaders and roles being eliminated – I continue to see this in my social media feed.” 

In Canada, while we pride ourselves on our immigration policy and the diversity it makes way for, we must confront the reality that systemic racism persists within our borders.  

To truly advance workplace diversity and inclusion, commitment does not stop after an inspirational press release. We must move beyond relying solely on legal rulings to take proactive measures. Re-examine diversity, equity and inclusion (DEI) efforts in your organization in light of the outcomes you aim to achieve; reaffirm the process and data you’ll use to get there; and recommit to carry you through these efforts. In other words, the way forward in this moment is to design DEI initiatives that are not simply window dressing. Consider:  

• sharing power with those most excluded by the status quo to jointly build a better organization 
• bringing the practice of DEI down to the level of everyday operations  
• treating DEI-related change work with the same gravitas and importance as any other organizational improvement 
• measuring what matters: the outcomes of diversity, equity and inclusion, rather than simply good intentions or vanity metrics 
• translating and integrating DEI into your core mission, purpose and values Beyond the walls of the organization, we must address the broader societal structures that perpetuate inequality and advocate for systemic change.

The Supreme Court’s ruling serves as a stark reminder that we have a long way to go in dismantling these entrenched systems. Weyermars emphasizes that “it’s important to understand that not everyone is starting from the same place and that different individuals and groups are facing significant and overlapping barriers to opportunities like education and employment that many of us take for granted.  A better, more inclusive future requires systems to uphold and create the conditions for deep, lasting change. Corporate leaders who have a high degree of influence over systems, policies and cultural norms are well-positioned to influence change in their workplaces and bring DEI commitments into reality.” 

The Supreme Court’s ruling on affirmative action in the United States represents a significant setback in our collective efforts to combat systemic racism. Justice Sonia Sotomayor’s dissenting voice resonates deeply with the consequences of the ruling: “Today, this court stands in the way and rolls back decades of precedent and momentous progress,” she wrote, adding that the decision “cements a superficial rule of colorblindness as a constitutional principle in an endemically segregated society where race has always mattered and continues to matter.” It underscores the fact that deeming race irrelevant in law does not erase the enduring impact of racial inequality in our society.  

Shilpa Tiwari is the co-founder of Isenzo, a boutique firm that takes a systems approach to ESG.

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“It was 2015, and I had this crazy dream about lip gloss and little native girls. I woke up in the middle of the night and started writing out all these ideas that came flooding from the dream.”

Her first thought was to create liquid lipstick to fund a scholarship in her grandmother’s name. Harper’s Anishinaabe grandmother was a residential school survivor and suffered great trauma as a result of the experience. Harper had a long-held desire to do something meaningful, something that would make an impact in her Indigenous community. But it wasn’t enough to create another line of lipsticks; she wanted to disrupt the $40-billion cosmetic industry. Harper wanted young Indigenous women to see themselves reflected in the products they used, to feel pride and “empowered to do great things.”

With social purpose and sustainability baked into the business model, Harper began seeking out investors to help her grow her fledgling business. After her third audition for Dragon’s Den, she was invited to pitch to the show’s panellists, thrusting her brand into the spotlight. When a “Dragon” offered her $125,000 for a 50% stake in her company, without hesitation she said, “No, thank you.”

It turned out Cheekbone Beauty had just been offered a $350,000 investment from Vancouver’s Raven Indigenous Capital Partners, a deal in which she maintained 100% ownership of the company, as well as $50,000 from Desjardins to create scholarships for First Nations children.

“We have a shared vision toward building economic reconciliation in Canada,” Raven managing partner Jeff Cyr said in a statement announcing the deal. “It’s inspiring Indigenous entrepreneurs like Jenn Harper, driving systemic change, and building dynamic and resilient Indigenous communities.”

Cheekbone Beauty is now in R&D mode, sharply focused on incorporating Indigenous knowledge and sustainability values into every aspect of its business. The company has set out to eliminate all single-use plastics and shift all raw ingredients to plant- or bio-based sources by 2023. The cruelty-free cosmetics company also donates 10% of proceeds to First Nations non-profits, including First Nations Child & Family Caring Society.

Cheekbone Beauty launched its new sub-line of Sustain lipsticks, packaged with 85% less plastic in recyclable paper tubes, in March 2020, right before the pandemic took the wind out of global lipstick sales. But while COVID affected the supply chain and operations, Cheekbone Beauty recovered quickly. The company saw a 350% increase in revenue in 2020 as media interest from Vogue, Elle and other major beauty magazines poured in. “Brands that focus on BIPOC communities really felt a big push in attention,” CEO Harper says from her office in St. Catharines, Ontario.

Representation matters. It’s important for Indigenous people to see themselves in the world around them, creating a sense of belonging. “Our North Star, our reason for getting up in the morning, is how our business is impacting and resonating with Indigenous youth,” Harper says.

“We want youth to see themselves in our products and know that they are beautiful and worthy.”

Shilpa Tiwari is the founder of Her Climb, a social enterprise with the mission to increase the number of racialized women in senior positions in corporations.

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Fuelled by a desire to address systemic inequity and armed with a master’s in political studies, Cyr took on lead roles in government agencies that gave him the opportunity to work from the inside to create space for Indigenous people at the proverbial table. But the roles also exposed him to the almost insurmountable barriers that Indigenous people face in every aspect of Canadian society.

Cyr didn’t grow up immersed in Canada’s troubled relationship with Indigenous Peoples. Born on the east coast of Vancouver Island, he spent his early childhood on a Canadian military base in Germany. His family returned to Canada when he was 10 and planted roots in the traditional Métis area of White Horse Plains, in southern Manitoba. Closer to his people, he began experiencing what it meant to be an Indigenous person in Canada: poorer health, lower levels of employment, high suicide rates, inadequate housing.

A high school exchange trip to India brought him face to face with another example of how a colonial past shows up in present-day policies, socioeconomics, and identity and cemented his determination to work toward removing systemic barriers. By the time he was taking leading negotiator positions in government, he was a firsthand witness to how the government’s attempts at inclusion were failing to break down “the very systems they put in place to excise Indigenous people,” a failure that prevented Indigenous people from becoming “full economic citizens.”

After more than a decade in government, Cyr felt compelled to find a different route to economic reconciliation. As the executive director of the National Association of Friendship Centres, he met Indigenous entrepreneurs working to build economic systems based on Indigenous knowledge and practices, guided by the wisdom of Elders and ancestors. Indigenous communities were innovating long before we started to hear corporations and governments speak to its value, Cyr points out. “We survived colonization, disease and economic exclusion because of our ability to innovate.”

“We survived colonization, disease and economic exclusion because of our ability to innovate.”

– Jeff Cyr, co-founder of Raven Indigenous Capital

 

But he noticed that Indigenous entrepreneurs remained unconnected to mainstream social innovation hubs, which offer access to capital, knowledge and networks. To increase the profile of Indigenous innovation within the larger social-innovation community, Cyr reached out to a number of organizations, including the McConnell Foundation, to hold the first Indigenous Innovation Summit. In 2018, he and two partners (including Paul Lacerte of B.C.’s Nadleh Whut’en First Nation) co-founded Raven Indigenous Capital Partners, Canada’s first Indigenous venture-capital intermediary.

Cyr explains that to transform historical power dynamics from dependency to self-determination, Raven leans in to a model that allows communities to set their own development priorities and then collectively brainstorm solutions rooted in Indigenous values and knowledge. A solutions-lab approach is used to determine needs and desired outcomes and connect with impact investors, foundations and governments.

Animikii, an Indigenous digital agency that was turned down for financing by big banks, was the first company to receive an investment through the Raven Indigenous Impact Fund in 2019. Animikii has sustained year-over-year growth, and the team has doubled in size. Other companies in Raven’s portfolio: Cheekbone Beauty, OneFeather (a digital voting and banking app), Virtual Gurus (a virtual assistant service) and Plato (a software-testing service).

“Decolonizing the investment process will open up niche market growth,” says Cyr.

Fundraising for the impact fund far surpassed the initial goal of $5 million, raising more than $25 million.

Cyr is proud of what Raven has accomplished to date, though he’s quick to point out that this moment is a result of many years of working with his Indigenous community and family. “Ultimately, we want a human-centred economy, one that centres on a balance between people and the planet.”

Shilpa Tiwari is the founder of Her Climb, a social enterprise with the mission to increase the number of racialized women in senior positions in corporations.

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SRI investment professionals, after all, collectively determine where to invest and divest trillions of dollars (US$40.5 trillion and counting), which positions them to move the dial on a variety of topics – including corporate performance on diversity, equity and inclusion (DEI). After a wave of CEOs pledged their solidarity with Black Lives Matter protesters in the spring, investors themselves started making broad industry commitments around DEI. In June, the Racial Justice Investing coalition of 128 institutional investors in the U.S., managing approximately US$2 trillion in assets, issued a statement of solidarity with anti-racism protesters and a call to action to address systemic racism. “We are seeking to use our wealth and class privilege to push toward racial justice and liberation, including pressing large employers to be more inclusive and to pay people equally regardless of race,” said Pat Miguel Tomaino from Zevin Asset Management, one of the endorsing institutional investors.

In October, Canadian institutional investors managing more than $2.3 trillion in assets signed the new Canadian Investor Statement on Diversity & Inclusion, an initiative coordinated by the Responsible Investment Association. By late November, BlackRock, the world’s largest asset manager, along with Nasdaq and Goldman Sachs, vowed to start pushing companies for greater racial and gender board diversity in 2021.

The progressive world of SRI investing may have a strong orientation toward creating an equitable and sustainable world, but it has an unfortunate contradiction. SRI firms are maintaining the status quo with an exclusive culture that’s made up of predominantly white professionals, particularly in senior and executive roles. Pensions  & Investments reported that since 2017, ESG teams have grown by 229% globally, but according to a 2019 study roughly 80% of SRI professionals in the U.S. are white, even though they make up approximately 60% of the wider population (and just 45% in major cities like New York and Chicago).

They’re not just failing to employ people of colour and provide opportunities for these professionals to advance; they’re also dropping the ball when it comes to investing in funds managed by people of colour.

At this point, the pot and the kettle seem to be the same colour. As Narinder Dhami, managing partner of Marigold Capital, explains, “Even though we talk a big game on diversity, we fail to see it applied in any meaningful way in impact investing.”

Some SRI professionals are owning up to the disparity. Matt Patsky explained to Bloomberg why his firm, Trillium Asset Management, with more than US$3 billion in assets under management, should get a “C” in DEI. He acknowledged that while his firm pressured investors to divest from South Africa during anti-apartheid struggles, just 10% of his 44 employees are racialized. “We have to start walking the talk and make the same changes we’re asking companies to make.”

“Even though we talk a big game on diversity, we fail to see it applied in a meaningful way in impact investing.”

— Narinder Dhami, managing partner of Marigold Capital

Principles for Responsible Investment (PRI), a UN-supported network of approximately 3,000 global signatories based in London, England, works to incorporate ESG (environmental, social and governance) criteria into the more than US$100 trillion that they collectively manage. But while PRI may be the “world’s leading proponent on responsible investment,” which includes advocacy on DEI, they too acknowledged to Bloomberg that “we aren’t where we want to be” in terms of diversity: just 22% of PRI’s employees are people of colour – when 40% of London is racialized.

Closer to home, the McConnell Foundation, a leading Canadian organization in the impact-investing space, has an admirable mission to build “a more inclusive, innovative, sustainable and resilient society.” However, almost 90% of its impact investments are in organizations founded or led by white Canadians. In 2019, the McConnell Foundation launched a Solutions Finance Accelerator to direct private capital to areas with significant needs. Of the nine participating intermediaries in this program, 44% are led by women and 22% are led or co-led by Indigenous people; however, the advisory panel for this accelerator consists entirely of white Canadians.

When approached by Corporate Knights, the McConnell Foundation acknowledged the problem. “We would agree with your assertion that the investment community in Canada continues to show a lack of diversity and that this reality is also reflected to a large extent in our own portfolio.”

Earlier this year, the McConnell Foundation committed to setting up an internal racial-justice working group to explore how to embed DEI principles more broadly in its granting and investing. Said a foundation representative, “The continual improvement of our practices is important. We know that we must, in every part of our activities, apply an equity, diversity and inclusion lens.”

While there is little doubt that these impact-driven organizations are focused sharply on creating equitable communities, until the sector addresses its own systemic racism and bias, research reveals that its work is bound to fall short.

The value of having people of colour leading SRI work goes well beyond boosting financial performance and innovation.

How does the lack of diverse leadership in the investment industry affect financial performance? The difference is noteworthy. Investment professionals who have similar life experiences often make decisions from a similar perspective, which can lead to overlooked opportunities. Studies have shown that the more similar the investment partners, the lower their investments’ performance. For example, a  study conducted by Harvard Business Review found success rates for acquisitions and IPO were on average 11.5% lower for partners that went to the same schools, compared to partners from different schools. The success rate of investments went down even further when partners are of the same ethnic background.

In a time when companies that are innovative are more likely to withstand the tsunami of changes to our geopolitical, environmental and social contexts, it’s more important than ever to build diverse teams. Studies show a correlation between the diversity of management teams and overall company innovation. The BCG Henderson Institute found that companies with above-average diversity in leadership generated 45% of their total revenues from innovation, while their less-diverse peers saw 26% of revenue coming from innovation.

The value of having people of colour leading SRI work goes well beyond boosting financial performance and innovation. SRI investment professionals engage with companies on advocacy, benchmarking and problem-solving to improve ESG outcomes that benefit our society and our planet. It’s essential that Indigenous and communities of colour that have been at the epicentre of the consequences of irresponsible corporate practices and devastating pollution have a central role in the SRI investing space. In many cases, racialized and Indigenous professionals bring lived experience to the table, and a nuanced understanding of proposed interventions and opportunities, potentially preventing well-intentioned initiatives from having negative impacts or consequences.

What can be done

In early October, Diversity in Sustainability hosted a workshop in Toronto at which 25 women of colour spoke about the challenges they faced as sustainability professionals, including having to forge their own paths without existing networks, actively feeling invisible, and being subject to micro-aggressions. If your firm wants to ensure you’re tapping into the diverse and extensive knowledge available in the field of SRI, first acknowledge that professionals of colour experience significant systemic barriers. Make an effort to expand your network and hire candidates who bring different perspectives to the table.

In addition to investing in diversifying your team, work on diversifying the companies that earn your investment dollars. An increasing number of funds, organizations and programs are being created and led by Indigenous and people of colour. Marigold Capital’s founder had been told throughout her career that she didn’t “have the right face to lead efforts,” and now she is one of the very few women of colour in Canada managing an impact fund that actively seeks to invest in companies and founders that have been overlooked. Raven Capital is also working hard to transform how and where capital is allocated, with its keen focus on Indigenous entrepreneurs and communities.

While businesses that target diversity are thriving, actual diversity is not. Deeply entrenched systems of bias – and, let’s face it, racism – can change only when leaders go beyond making statements and pledges. If SRI investment professionals want to play a credible role in influencing corporate behaviour on DEI, they’ll have to look within. To create change, the SRI community needs to articulate clear goals and actions that disrupt systems of bias, not just in the companies they invest in, but in their own firms and foundations.

There has never been a more opportune time to disrupt deeply entrenched systems that are keeping your company from being competitive on the global stage. Seize the moment.

Share your viewpoint in the Equity, Diversity and Inclusion in Sustainability Survey

In a field where we strive to create a better world and better future, how equitable, diverse and inclusive is the sector of sustainability?

Diversity in Sustainability, a new non-profit focused on increasing equity, diversity and inclusion in the field of sustainability, would like to hear more about your background, your experience working in sustainability, any barriers you had entering the field, and if your organization supports equity, diversity and inclusion.

You can fill out the Equity, Diversity and Inclusion in Sustainability survey at https://www.diversityinsustainability.com before March 23, 2021.

A global summary of the findings will be shared in Summer 2021.

The post Beyond the pale: Responsible investing firms failing to invest in people of colour appeared first on Corporate Knights.

A significant body of research has made clear the correlation between a diverse senior management team and improved company performance. McKinsey’s latest diversity study, released this spring, found that companies in the top quartile for ethnic diversity were 36% more profitable than those in the bottom quartile. A 2018 Deloitte report found that inclusive companies also outperform on customer satisfaction (+39%), productivity (+22%) and turnover (-22%). Regardless of the evidence, however, moving the dial on corporate diversity, equity and inclusion is complicated and slow going.

Corporate Knights analysis of 68 Toronto Stock Exchange companies with at least $1 billion in annual revenue found that just eight had at least 10% racial diversity on both their boards and senior executive teams, including Canadian Solar Inc., BlackBerry Limited and Toronto-Dominion Bank (see table below for the top 10). More than a third (37%) of large publicly traded companies in Canada did not have a single racially diverse board member or senior executive. It’s a startling figure, considering that 27% of Canada’s population is racially diverse, with 5% of that being Indigenous.

A number of companies are scrambling to address racial inequities by hiring a chief diversity officer (CDO) or diversity and inclusion (D&I) manager. But between the politics, bureaucracy, fiefdoms and silos, one CDO or D&I manager – with little to no budget, limited staff and a reporting line that is levels down from the CEO – is hardly going to be heard, let alone redesign a system to change ingrained beliefs and power structures.

The ways in which systemic racism and bias are deeply rooted within corporations are not always easily identified or understood. In addition to Black, Indigenous and people of colour (BIPOC) being passed over for promotions more often and hired at levels far lower than their qualifications, in recent months racialized Canadians have publicly shared their experiences of microaggression in the workplace. I myself have had a C-suite executive assume that I had completed my doctorate degree at an Indian university, even though I’m Canadian. I was also told, by the same female executive, that there are not enough qualified women of colour. Meanwhile, there are more racialized professional women in Toronto than non-racialized professional women, yet non-racialized women still outnumber racialized women in corporate leadership roles 12 to 1, according to Ryerson University’s 2020 Diversity Institute study, Diversity Leads.

These types of comments may seem harmless; however, research indicates they have a powerful impact. Between 2016 and 2018, Catalyst, in association with Ascend Canada, surveyed men and women who identify as Black, East Asian or South Asian. The study found that people of colour carry an extra emotional burden at work that’s detrimental to their health and often causes them to contemplate quitting.

How can companies do better?

Making charitable contributions to organizations committed to serving diverse groups, supporting events that celebrate our vibrant and diverse communities, making pledges to increase board diversity, and announcing targets to increase the number of racialized employees by a specific percentage by a certain date – these are important and good starting points. However, we cannot brush off the hard, roll-up-your-sleeves, long-term work of creating a diverse workplace where all employees can bring their full selves to work, be engaged and productive, and feel that they are valued, supported and belong.

Map the right metrics

What types of data, metrics, actions and organizational structures enable us to create equitable and inclusive workplaces? First, collect data on gender, race, ethnicity, age and disability at each job level and analyze for hiring, promotions, terminations and departures. Pay data is already being collected; use this data to analyze salary gaps within and between jobs by gender, race, ethnicity, age and disability. In addition, consider conducting surveys that capture employees’ experiences and views on compensation, promotions, assignments, mentoring and performance reviews. Questions such as “Do you feel that people see you as a member of a racial group rather than a team member?” or “Do you feel that you have to prove yourself repeatedly to get the same recognition as your colleagues?” can provide answers about where bias occurs most often and what systems need to be improved.

Distribute skill-building

Every workplace has high-profile assignments that are career-enhancing and low-profile assignments that benefit an organization but not the individual’s career. Research indicates that racialized professionals are more often assigned low-profile work. Distributing high-profile and low-profile work equitably lets you tap into the full potential of your team and support individuals’ professional development goals as well as the team’s goals. Ask a junior colleague to chair team meetings and manage the agenda to create space for more dialogue and different perspectives. Diversity at the top can occur only when diverse employees at all levels of the organization have access to assignments that let them take risks and develop new skills.

Create belonging

To identify systemic issues in the workplace, we have to take steps to understand racialized people’s experiences in those spaces and use that knowledge to make changes that foster belonging. Pay attention to how biases show up in meetings and work proactively to address them. Keep track of the composition of the meetings – who speaks, who doesn’t. Has everyone had the opportunity to contribute? Sometimes before meetings I ask colleagues who are quieter if I can call on them. I want to ensure they have space to contribute without making them feel uncomfortable. Every time I’ve done this, the person has welcomed the opportunity to contribute and appreciated the space created for them.
Also, keep track of who gets credit for ideas versus who originated them and ensure that everyone with a part to play is at meetings. We can all recall a time when our ideas and work were credited to someone else, but racialized people experience this more frequently, racialized women in particular.

Go beyond HR

Beyond data and metrics, we need to acknowledge that the world is changing quickly and question whether traditional organizational structures enable the corporation to address emerging business priorities. In many conversations with racialized peers throughout my career, I have heard frustrations about not feeling heard by HR, feeling that HR was “on the side of the corporation, not employees.” Human resources departments are set up to manage risk, an important and necessary function; however, they may not be the right department to advance the diversity, inclusion and belonging agenda. It’s unrealistic to expect employees to see HR, the department that terminates employees, as also the department responsible for creating an equitable, engaging and inclusive workplace. If new ways of conducting business are to emerge, so too must new organizational reporting lines.

Chief diversity officers

Roughly half of S&P 500 companies now have chief diversity officers, according to The Wall Street Journal, which found that while demand for CDOs is high, so is turnover, with many CDOs leaving because of “a lack of resources, unrealistic expectations and inadequate support from senior executives.” Either the CDO must be empowered by the organization to make the systemic change it’s seeking or, as in the case of Neilsen’s David Kenny, the CEO should consider also taking on the CDO role.

Regardless, as corporations come face to face with disruption, leaders need to really listen to their teams, be willing to make the necessary changes, conduct themselves with compassion and put their people first. Diverse voices must actually be heard. This requires listening without preconceived notions, which sounds easy, but it requires empathy and a culture that truly values open communication.

We are at a moment in time when corporations are faced with an overwhelming demand for change. We have an opportunity to ensure that diversity flourishes throughout companies and to create a culture of belonging. As Maya Angelou said, “I’ve learned that people will forget what you said [and] what you did, but people will never forget how you made them feel.” In the corporations of the future, racialized employees must feel that they are included and that they belong.

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