An Era of Heightened Social Accountability Means Change Regardless of Opinions and Ideologies

Written By Shereen Daniels

In an unprecedented global election year, the financial services sector and other industries stand at a pivotal crossroads. Geopolitical unrest and societal shifts are redefining the landscape of corporate responsibility and what it means to be a responsible and sustainable business.

At this juncture, the role of financial services companies, particularly in the UK and the US, in effectively communicating and acting in line with evolving stakeholder expectations on sustainability, human rights, and ethical business practices, has never been more crucial.

My work with corporations and non-profits is centred around the critical issue of addressing systemic racism and discrimination. I view this not just as a societal concern, but also as a business risk and opportunity, a lens through which I assess the macro environment to understand emerging patterns and their implications for organisations.

In a febrile political environment, the knock-on consequences of getting it wrong, initiatives being misunderstood, or disclosures being interrogated are why social issues should be viewed as business risks and opportunities.

Firms, therefore, need to proactively elevate this issue to the boardroom rather than exceptionalism and make it an inclusion item for the DEI or HR team. Actions to address racism and discrimination shouldn’t merely be a response to social movements or an opportunity to apply cultural enhancements when business is going well. By taking these steps, we can all contribute to a more just and equal society.

Firms should disclose more of the concrete measures they are taking to mitigate the negative impacts of their operations on their workforce, communities, consumers, partners, and suppliers. These actions should be substantiated commitments that go beyond putting Black and Brown faces in quasi-high places, actions that tend to entrench the myth of a meritocratic society without creating meaningful change. By doing so, we can build trust and confidence in our commitment to combat racism and discrimination.

Meaningful actions can be taken to address racism, bias, and discrimination within your company and your value chain. Some examples of efforts that go beyond increasing representation could be:

 

·         Conducting comprehensive voluntary racial equity audits that assess their operations, policies, and practices for racial biases, discrimination and disparities and investing in remedial actions to address these issues.

·         Critically evaluating your approach to diversity, equity and inclusion to assess how well it has addressed the issues of racism and discrimination, for example.

·         Running feedback sessions with racialised employees so they act as the barometer as to how much progress and impact you have made thus far. Life should feel different and better for them.

·         Investing in communities and diversifying their supplier base. This means actively seeking out and partnering with Black and Global Majority businesses, investing in community initiatives that support racial equity, and providing platforms for racialised entrepreneurs. These initiatives should have quantifiable metrics associated with and reported on as part of your sustainability and social impact disclosures.

If you are a board of a publicly traded company, part of your job is to oversee risks to the company. And those include all types of risks. Although I’m not a fan of the term ESG, if you have these buckets of environmental issues, social issues, and governance issues, poorly managing any one of those risks can potentially lead to poor performance, because the company could be opening itself up to lawsuits to regulatory scrutiny, headline risk, etc.

When it comes to racial equity audits and racial and racial justice issues, for example, those are issues that touch every element of a company's business. It can touch on products, how they're developed, it touches on a company's marketing, whether there's like implicit bias involved and supply chain, how you're selecting your vendors, it can touch on internal hiring practices, right with, you're able to attract and retain ‘diverse’ talent. These operational elements constitute a company's performance, so they are not just social issues. – Tejal Patel, Executive Director SOC Investment Group in conversation as part of Advancing Racial Equity 4.0 Podcast - Racial Equity: An Issue of Risk Rather Than A Matter of Conscience

Irrespective of what you think or do, navigating this path is fraught with complexities. Even well-intentioned actions can be misconstrued in public discourse. Retreating from initiatives due to changing socio-political climates bears significant consequences, particularly for those employees and communities most affected by these issues.

When global unrest, political instability, and societal transformation reshape how businesses conduct themselves as entities and leaders, a balancing act must be performed. How does one monitor and respond to stakeholders with conflicting or competing interests, and how does this impact the ability to optimise workplace cultures to work for everyone rather than just the dominant majority?

[This is an edited article originally written for the Financial Services Forum – on 16th February 2024 Available here: https://thefsforum.co.uk/knowledge-hub/strategies/guest-column-an-era-of-heightened-social-accountability-means-change-regardless-of-opinions-and-ideologies/ ]


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Advancing Racial Equity 4.0 curates the best conversations with business, legal, management and racial equity experts and activists to help you understand how to address systemic racism within your workplace and why it matters.

Racial Equity: An Issue of Risk Rather Than A Matter of Conscience

Tejal Patel joined the SOC Investment Group in 2016 as Corporate Governance Director, where she focused on shareholder advocacy issues including the opioids crisis and racial equity audits.

In her current role, she has worked with investor coalitions to develop strategies for issuer engagements, shareholder proposals, director accountability, and asset manager outreach.  She currently serves as a director and the Labor Constituency Co-Chair for the Council of Institutional Investors (CII) and previously served on the U.S. Asset Owners Advisory Council from 2019-2021.  She holds a J.D. from the University of Connecticut School of Law and a MSc. from the London School of Economics.

In this episode, we explore the delicate balance between setting meaningful goals and the resistance encountered when calling for a deeper, more substantial commitment to racial equity and implementing preventative measures.

Shereen Daniels
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