How the Black Lives Matter Movement Enhanced Corporate Governance in 2020

• Publication year: 2021

How the Black Lives Matter Movement Enhanced Corporate Governance in 2020

Blair Johnson

HOW THE BLACK LIVES MATTER MOVEMENT ENHANCED CORPORATE GOVERNANCE IN 2020

Introduction

The year 2020 brought the United States' ongoing issues of racial injustice and police brutality to the forefront. With the deaths of Breonna Taylor, Ahmaud Arbery, George Floyd, and countless other people of color, the Black Lives Matter movement has focused on uprooting and dismantling systemic racism in the United States.¹ During what may be "the largest movement in U.S. history," individuals and organizations are asking themselves what actions they can take to combat systemic racism in the country.² Many corporations have chosen to speak out and use their platform to raise awareness of the issues of racism in the United States. Others have chosen to remain silent. The ones who have chosen to use their voices have done so in ways such as posting statements on social media or their websites.

Raising awareness by posting statements only goes so far. Tangible actions to address systemic racism must follow. This Comment argues that corporations should implement anti-racism strategies into practice after making anti-racism statements during the Black Lives Matter movement. Additionally, the U.S. Securities and Exchange Commission ("SEC") should amend its rules to require more diversity and inclusion efforts when corporate executives nominate board members.

This Comment features five Parts. Part I is about the Black Lives Matter movement's connection with corporate America. Part II discusses where corporations were years before the 2020 Black Lives Matter Movement with the 2009 SEC rules. Next, this Comment looks at legislation and rules that were put in place right before the Black Lives Matter Movement, such as the 2009 SEC rule amendment in 2019, the Improving Corporate Governance Through Diversity Act of 2019, and the 2018 California Senate Bill 826.

Part IV discusses the impacts the Black Lives Matter Movement has had on corporate America. In this Part, this Comment analyzes the Top 10 Fortune 500 companies and select others. The others are traditional corporate forms, as well as a few benefit corporations. The analysis focuses on whether the companies

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put out statements and plans for making internal changes to combat racism. The internal changes might include diversity requirements in the makeup of their Board of Directors, training such as implicit bias awareness, or other ways to implement anti-racism and diversity strategies into their practices. This Part also discusses where corporations can go from here and how they can improve in the future by implementing strategies such as corporate social responsibility, incorporating as a benefit corporation, and enacting corporate activism.

Finally, the Comment concludes with possible future steps in research, including how corporations can ensure that large decisions trickle down to everyday practices, such as inclusive customer experiences in retail.

The policy importance behind implementing anti-racism strategies into corporations is that corporations have a large voice and platform in the country that can be used to make even a small amount of change. Not only will adopting these practices allow more people of color to have a seat at the table, but they will show individuals and other entities that even these businesses are taking a stance. Even though addressing racism within corporations will not alone change systemic racism in the United States, holding corporations accountable is a mark toward progress, especially in creating a more equal economy. As Valerie Wilson, director of the Economic Policy Institute Program on Race, Ethnicity, and the Economy said, "While losing a job comes nowhere close to losing a life, both are symptoms of the kind of racial injustice that sparked national and international protests this past summer."³

While civil rights and social justice movements are not new, the modern era brings novel platforms to enact change. In the 1980s, companies implemented diversity training, but the training was mostly a tactic to protect against civil rights lawsuits.⁴ Diversity training did not seem to help corporations since they are still lacking in their diversity and inclusion efforts as this Comment will show. The Me Too movement, which came to prominence in 2018, is a modern social justice movement most similar to the Black Lives Matter movement in 2020.⁵ The Me Too movement focused on combating sexual violence and

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uplifting women's stories.⁶ Entities, such as corporations, took action due to instances of sexual violence brought to light at the workplace.⁷ Some companies implemented anti-harassment policies, and some added more women to their Board of Directors.⁸ A few states, like California, even mandated that corporations add women to their Board of Directors.⁹

The main difference between the Me Too movement and the Black Lives Matter movement is that the Black Lives Matter movement reaches broader. Instead of focusing on one issue, such as sexual violence like Me Too, the Black Lives Matter movement seeks equity and racial justice in all areas and issues of life and business, especially combating police brutality and racism in general.¹⁰ Even though the two movements have major differences, comparing the two helps analyze what corporations can do to address social issues.

While helping to progress society, companies should consider diversity and inclusion efforts because they will see a positive outcome for themselves. In the end, it is a win-win situation. Not only does diversity help businesses internally, but it helps externally as well with investors and markets.¹¹ Studies have shown that companies with ethnically diverse boards are 70% more likely to capture new markets than those with less diverse boards.¹² The companies with diverse boards generate 38% more in annual revenue from innovative products and services.¹³ Hopefully, with internal corporate changes and external SEC changes, a shift will occur where more people of color are involved in the corporate world.

I. The Black Lives Matter Movement and the Corporate Role

A few paragraphs will never encapsulate the full history of systemic racism in the United States. From the country's beginnings, people of color have been oppressed in all areas of life. Organizations and movements, such as Black Lives Matter, hope to encourage change and promote equality.

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The Black Lives Matter movement seeks justice and equity in the modern era.¹⁴ Founded in 2013 by three women—Alicia Garza, Patrisse Cullors, and Opal Tometi—the Black Lives Matter movement began in response to "the acquittal of Trayvon Martin's murderer, George Zimmerman."¹⁵ The movement is now a member-led global network of more than 40 chapters.¹⁶ "Black Lives Matter is an ideological and political intervention in a world where Black lives are systematically and intentionally targeted for demise. It is an affirmation of Black folks' humanity, our contributions to this society, and our resilience in the face of deadly oppression."¹⁷

While the movement focuses on policy change and activism, it also raises awareness of the importance of building up the economy with black businesses and entrepreneurs.¹⁸ This is where corporations come into play. For example, in 2017, the Black Lives Matter organizers created the hashtags #BuildBlackCommunity, #CurbYourConsumerism, and #BuyBlack to encourage consumers to boycott "White Capitalism" while shopping for the holidays.¹⁹

Many activists and scholars have spoken to the connection between capitalism and racism in the United States. Ibram X. Kendi, author and founding director of the Anti-Racist Research and Policy Center at American University, claims capitalism and racism are "conjoined twins" and that "the origins of racism cannot be separated from the origins of capitalism . . . the life of capitalism cannot be separated from the life of racism."²⁰ Kendi states his connection by referring to the slave trade and how it was a large part of the accumulation of wealth in Europe.²¹ Kendi also expresses that slaveholders shaped the economic policies of the United States.²² Lawmakers drafted those economic policies many years ago at a time when minority communities were not taken into account. Trying to combine those aged policies with today's society does not work.

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One example of those policies includes insurance policies during The New Deal and how they affected black women.²³ Social Security at the time disqualified workers in the agricultural and domestic industries.²⁴ "These provisions meant that nine out of ten African American women workers were automatically rendered ineligible."²⁵ The black women who were affected lost state-based financial assistance for over a decade while the majority of the rest of society received the assistance.²⁶ Ten years is a long time and makes for generational impacts that can be seen in today's society.²⁷ "Despite its prominent status as 'the closest thing to a race-blind social program the United States has ever known,' Social Security was marked by inequity at its origins."²⁸ Other examples include issues in minimum wage laws, prevailing wage laws, workers' compensation policies, and disability insurance policies.²⁹

Other scholars have also written about the relationship between racism and capitalism. "In a general sense, racial capitalism in the United States constitutes 'a peculiar variant of capitalist production' in which Blackness expresses a structural location at the bottom of the labor hierarchy characterized by depressed wages, working conditions, job opportunities, and widespread exclusion from labor unions."³⁰ Since racism and capitalism are so closely intertwined, there is no question that corporations should keep this in mind when making decisions.

Korn Ferry and the Executive Leadership Council ("ELC") conducted a...