Diversity audits are multiplying and have become an essential measure of progress

Happy Friday and Happy New Year.

Will this be the year that American companies will be entitled to inclusion?

I sat down this week with former U.S. Attorney General Loretta Lynch to learn more about an increasingly popular tactic used by shareholder groups to ask this question. But first, I want to offer a word of encouragement from the civil rights veteran for those working on inclusion in any capacity who are feeling burnt out. The work works, she says. “We’re the ones pushing this company to where it always claimed it wanted to be.”

More on that below.

The tactic in question is civil rights audits, also known as racial equity audits, which are third-party assessments of a company’s role in addressing systemic racism. Requests for these audits, usually submitted by groups of shareholders, are up, according to KPMG, which tracked some 19 shareholder proposals in 2021, and more than double that number in 2022. And they’re keeping Lynch, who currently leads the practice of civil rights and racial equity audits, as a partner at the firm of busy lawyers Paul, Weiss, Rifkind, Wharton, & Garrison. His work includes the highly anticipated Amazon Audit of his treatment of hourly workers and successful packaging legal action against affirmative action brought against pharmaceutical giant Pfizer for offering scholarships specifically to BIPOC people. “This job takes up about 25% of my time now, and I expect that to increase,” she says.

Audits can be broad or narrow and can focus on specific internal inclusion initiatives, established social justice commitments to the outside, or an urgent review of where companies are perpetuating racial disparity, discrimination. discrimination or prejudice. In 2016, Airbnb Inc.. became the first major US company to conduct an audit after black customers reported credible stories of racist treatment. Two years later, Starbucks agreed to a similar audit after a store manager called the police on two black customers in a Philadelphia store.

Now they are becoming an essential accountability tool in the wake of the 2020 murder of George Floyd and an effective way to advance the conversation about race at the highest levels of corporate governance. Although there have always been many rejections when they appear in a proxy filing, JPMorgan Chase & Co. CEO Jamie Dimon dismissed them as “bureaucracy and BSbefore accepting an audit of its $30 billion pledge to advance racial equity in lending — big companies are increasingly finding value in the exercise, even if shareholder votes don’t pass . City, black rockand Apple all have embarked within the past two years.

Lynch says these evaluations measure impact, which isn’t always easy to do internally. “It’s not just an audit or an evaluation of the programs you have,” she says. Instead, it is an opportunity to ask bigger questions about the deployment of resources and how initiatives are received by aggrieved communities, be they potential disenfranchised owners, cafe customers or BIPOC employees. “Are [your commitments]actually giving you the results you want to see? »

This brings me back to all of you.

Lynch says he expects a series of reports released over the next year from the audits currently underway and more audit announcements to come. “We will continue to see shareholder proposals for these audits whenever unfortunate incidents of discrimination come to light,” she says. The results will always be mixed, and it can be uncomfortable. “There are still times when people don’t reach their goals and aspirations, and someone gets kicked out of an important program or really hurt about something.”

And that makes the daily work of inclusion even more important.

Maintaining dialogue about race is a critical part of successful equity engagements, even when it’s personally uncomfortable. But for anyone who has DEI in their job descriptions, these book ban days and anti-revival legislation feel particularly gloomy. Stay the course, Lynch said. “Any time you see greater expansion in this work – whether it’s the racial justice discussion or active steps to bring about racial justice – you always see a corresponding backlash to that, to that discussion and to these actions.”

The backlash may seem permanent. It’s not, she says.

From Lynch’s perspective, the arc of your work bends toward success. “The resistance you feel [and] this backlash is not the torrent that advances,” she says. “We are the torrent that moves forward, the forces that move this discussion forward, that open this dialogue, that raise these questions, that keep them at the forefront of discussions.”


Ellen McGirt
[email protected]

This edition of raceAhead was edited by Ruth Umoh.


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Research bench

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The Washington Post

Farewell words

“I love you boys.”

Damar Hamlin, Buffalo Bills player first words to his teammates after removing his breathing tube.

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