Most corporations recognize the importance of having a diverse and inclusive workforce. However, few companies have yet to realize the larger impact that adopting more equitable practices can have on both society and their own profitability.
That’s why PolicyLink, an advocacy organization at the forefront of a movement to advance equity through policy and systems change, has teamed up with FSG, a mission-driven consulting firm for leaders in search of large-scale, lasting social change, to develop the Corporate Racial Equity Advantage. It will be the first tool created to help corporations embed equity into every aspect of their business operations and strategy. Ultimately, it will be a tool to assess a company’s overall impact on low-income and marginalized populations.
“The future of America depends on equity—just and fair inclusion in a society in which all can participate, prosper, and reach their full potential,” said Angela Glover Blackwell, CEO of PolicyLink, and Mark Kramer, FSG Founder and Managing Director, in a co-written article. “The private sector is the next frontier for the equity movement, and racial equity is the next frontier for corporate America.”
The Corporate Racial Equity Advantage is intended to move beyond conventional metrics of workforce diversity, corporate governance and philanthropy. The tool will be more comprehensive in nature: it will also consider the impact of a company’s training, compensation and promotion practices, its products and services, market and sales, procurement practices, community engagement and lobbying efforts.
PolicyLink and FSG have raised $1.5 million to develop this corporate equity index. Over the next 15 months, the two organizations plan to convene a broad-based group of stakeholders to help design, refine and pilot the tool.
The Corporate Racial Equity Advantage is grounded in the principle of shared value. Shared value consists of “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions of the communities in which it operates,” writes Harvard Business School Professor and founder of ICIC, Michael E. Porter. “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.” The tool is designed to help companies improve their bottom line by embedding equity policies and practices that benefit those traditionally excluded from the economic mainstream.
The tool could have a potentially profound impact on inner cities, where more than two-thirds of residents are African American or Hispanic. Only 15% of inner city residents aged 25 years and older have a Bachelor’s degree or higher versus 29% in the U.S. overall. The median household income in the inner city is just $30,300 versus $53,000 nationwide. The Index may prove critical in creating new corporate channels that help inner city residents prosper.
Corporations are also well-positioned to create shared value within the urban core. As these corporations begin to embed equity at all levels of their business operations and strategy, they need look no further than their own backyards as a place to create an immediate impact.
“Equity is not a zero-sum game,” says Blackwell. “Everyone wins when circumstances are created that allow those left behind to participate and contribute fully,” she said.