U.S. companies vow to fight racism but face critics on diversity

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In the past, U.S. corporations have largely remained silent as protests erupted over killings of African-Americans by police officers. That changed with the May 25 death of George Floyd in Minneapolis, which has set off a flurry of corporate statements of solidarity with the black community – along with pledges of more than $1.7 billion to advance racial justice and equity.

The unprecedented outpouring of support, however, has stirred up criticism along with praise. Many social justice advocates, corporate diversity experts and investors say companies also need to focus on equity in their own ranks, especially by hiring and promoting minority workers.

The tensions show the difficulty executives face in aligning their firms with popular social causes at a time of soaring wealth and inequality – and growing pressure from some investors to show leadership on societal problems. Activists, along with some business leaders, also see an opportunity amid global protests to push reform on social justice issues well beyond police brutality.

The rush of corporate concern belies the reality of workforce inequity, said Natasha Lamb, managing partner of Arjuna Capital. Arjuna is a Boston-based investment adviser and frequent filer of shareholder resolutions pressing companies – with mixed success – to disclose more data on pay equity.

“If you take an honest look at corporate America, outside their glossy diversity reports, structural bias for women and people of color remains as entrenched as ever,” she said.

Floyd’s death has sparked a movement with wide-ranging goals, said Fiona Ma, California state treasurer and a director for systems managing about $650 billion in state retirement assets. “It’s not just law enforcement” at issue, she said, calling the protests “a greater statement of today’s values and holding people and companies accountable.”

Leaders of major companies including Comcast Corp (O:CMCSA), Nike Inc (N:NKE) and Warner Music Group Corp (O:WMG) have announced major gifts to advance racial justice amid the protests over Floyd’s death. Bank of America (NYSE:BAC) pledged $1 billion over four years to address economic and racial inequality. At least a dozen other big companies announced gifts between $1 million and $100 million for similar efforts. FACTBOX:

“Our Black community is hurting, and many of us are searching for ways to stand up for what we believe,” said Sundar Pichai, CEO of Google parent Alphabet Inc (O:GOOGL).

Companies’ willingness to take strong stands could signal a substantive shift in the attitudes of corporate leaders, said Jim Paulsen, chief investment strategist for Leuthold Group, a research and asset management firm. “Some is probably lip service, but I think it goes beyond that, and there’s a realization that something needs to change,” Paulsen said.

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