Prioritising racial equity: WEF launches new framework

A new paper sets the groundwork for higher standards in ensuring racial and ethnic equity in the workplace, as US police brutality against people of colour hit the news again and US Black History Month begins.

Portrait of a smiling businesswoman

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Unveiled at the World Economic Forum’s annual meeting in Davos, the paper explores how the world’s largest companies can evolve beyond traditional diversity, equity and inclusion (DEI) strategies, expand the scope of their action, and deliver “a more resilient, sustainable and equitable future for all” that will also draw down global economic growth and wealth generate.

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Cross-industry action on racial and ethnic equity

The paper has been developed over the past three years by the WEF’s Partnering for Racial Justice in Business Initiative, and coincides with the launch of a new report from initiative member, KPMG, Inclusion Spotlight: Black Heritage talent initiatives in financial services.The WEF's global, cross-industry community of around 250 large businesses, including HSBC, KPMG, AstraZeneca, Boston Consulting Group, Tata Consultancy Services, LinkedIn, Ingka Group (IKEA) and McKinsey & Company, is committed to advancing racial and ethnic equity in their workforces and operations.“With just 1% of Fortune 500 companies led by Black chief executives, the need to tackle racial under-representation in business is urgent and obvious,” commented Saadia Zahidi, managing director at the World Economic Forum at the coalition’s launch. “To design racially and ethnically just workplaces, companies must confront racism at a systemic level, addressing not just the structural and social mechanics of their own organisations, but also the role they play in their communities and the economy at large.”“In order to have an economy that works for everyone, we all have an obligation to address the inequalities that have existed for too long; that includes systemic racism,” commented Michael Miebach, Chief Executive Officer of Mastercard.“We believe that our success comes by ensuring decency, wellbeing and inclusion are part of everything we do. Bringing together groups like this creates the potential for greater impact, accelerating our ability to learn from one another and deliver action at scale.”According to the 2022 Parker Review 94% of companies in the FTSE 100 have a board member of an ethnic minority background, however, the representation of Black Talent is estimated to be very low. The report concluded that Black communities face greater barriers than some of the other ethnic minority groups and that it will assess this issue

Making sure Black lives matter in the workplace

Prioritising Racial and Ethnic Equity in Business: Towards a common framework, is clearly an important addition to boardroom conversations.The brutal beating of Tyre Nichols, a Black man, during a traffic stop by Memphis Police Department at the start of this year was followed by Mr Nichol’s death three days later. Widespread public condemnation and protests have followed Mr Nichol’s death, which the Memphis Chief of Police, Cerelyn Davis, said was a “failing of basic humanity toward another individual.”Mr Nichol’s beating came three years after the murder of George Floyd by a police officer in Minnesota. Mr Floyd’s killing brought the Black Lives Matter movement to global attention in 2020, precipitating important conversations about people of colour’s experience in society and economically, and raised more awareness of the inequities people face.

Evolving DEI to tackle the global permacrisis

By intertwining “economics with values”, the WEF paper seeks to deepen the business agenda on these important social and economic realities. In the US, for example, close to half of HR professionals who are Black believe there are racial and ethnic inequities in the workplace compared to just 13% of non-Black HR professionals. Similarly, in Latin America, people from indigenous populations and people with African heritage earn least. And in South Africa, where 19% of the population is not Black, only 14.3% of top-level executives were Black South Africans.In the UK, data shows that people of colour are not offered the same career progression as their white counterparts because of access to development opportunities and mentorship. In the EU, research showed structural racism from recruitment through to pay.Based on HSBC’s foundational Ten Guiding Principles for Racial and Ethnic Equity, the WEF’s report underlines how racial equity and justice is a global problem in the post-COVID polycrisis, and poses a real threat to social cohesion, global growth, productivity and wealth generation.Yet by combining the business case with core values and a “whole-of-business approach”, the WEF community believes that fairness for every employee through corporate advocacy will help create more representative workforces. Key is evolving current approaches to DEI.

Ten areas of focus for more racially equitable businesses

Recognising the value of traditional DEI approaches, the WEF’s paper says these have helped to reinterpret the parameters for companies and organisations for people with protected characteristics.However, what is needed now is to raise awareness of racial and ethnic equity by recognising the gaps that exist in policy and practice and by creating spaces in organisations for a clear focus on those where every voice is heard and everyone feels seen.The paper proposes ten guiding principles backed by data collection and analysis sensitively handled in line with local legislation. This alongside self-assessment on cultural competencies and internal accountability mechanisms for example as a way of focusing on systemic outcome gaps for people of colour.The ten steps for expanding businesses’ scope of action around race inequities bring together the economic case with values and fairness. “By taking action across these key business areas, businesses can address the gaps in traditional DEI approaches, vastly expanding their impact on racial and ethnic equity gaps,” says the paper.
  1. Leadership commitment
  2. Employee networks
  3. Work environments
  4. Policies and procedures
  5. Branding, communications and marketing
  6. Innovation and product design
  7. Recruitment, retention and development
  8. Knowledge sharing and training
  9. Technological fairness
  10. External stakeholders and social impact.

The UK financial sector and people of Black heritage

A new report KPMG this month also deepens knowledge and awareness of the experience of people with Black heritage in the financial sector. Inclusion Spotlight: Black Heritage Talent Initiatives in Financial Services focuses on Black community underrepresentation in the industry.Although the 2022 Parker Review reported that 94% of companies in the FTSE 100 have a board member of an ethnic minority background, the representation of Black leaders is estimated to be very low. The report concluded that Black communities face greater barriers than some of the other ethnic minority groups and that it will assess this issue in the future.With financial services firms needing to report from this year as to whether they meet the minimum requirements set by the Financial Conduct Authority (FCA) Policy Statement 22/3 on their boards and executive management teams’ diversity, KPMG’s report examines how financial services firms are supporting Black heritage colleagues and the impact their efforts are having.Closing the WEF in Davos, Børge Brende, President of WEF Davos, said, “We can only shape a more resilient, sustainable and equitable future for everyone, but the only way is together.”

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