Opportunities for Private Sector Impact on Racial Equity
Lawyers who choose to practice in the corporate or law firm setting can also contribute to this cause through their role as trusted advisors to corporate America. Indeed the business and service sector represents nearly 90% of global GDP, and 74% of worldwide employment, and their resources offer leverage for driving progress. Moreover, corporations are increasingly focused on engaging on these issues. ‘Racial Equity and the SDGs’ second session, How Fiduciary Duty Can be a Force For Change - The Role of the Lawyer in Advancing the SDGs, explored corporate efforts around racial equity and human rights and how law firms and corporate general counsel divisions can contribute to this effort.
Moderator Adam Roy Gordon, Engagement Director for the United Nations Global Compact’s Network USA, explained that his organization offers support to attorneys adapting to the changing context of business. Indeed, macro-pressures such as international human rights legislation, increased transparency and disclosure requirements, activist litigation and consumer demand are transforming business strategy, as are the desires of job recruits who seek a shared-value approach to their professional lives whether they use this terminology or not.
Understanding this, corporations are considering these issues not just through a separate corporate responsibility function, but by incorporating human rights practices into their core strategies. Panelist Tim Wilkins, Global Partner for Client Sustainability and a Corporate and M&A partner at Freshfields Bruckhaus Deringer, said that nowhere was this more evident than in the corporate statements responding to the deaths of George Floyd and Brianna Taylor. Wilkins identified the social bonds undertaken by Alphabet and Coca Cola that were inspired by these protests, and explained that these corporations will use this financing to increase their investment in and skilling-up of black-owned businesses and suppliers. This interest in supplier diversity embodies a shift in corporate purpose from the Milton Friedman doctrine of the 1970s that ‘the social responsibility of business is to increase profits’ to, as Wilkins explained, a multi-stakeholder approach which appreciates the interests not just of shareholders, but of suppliers, employees, consumers and the communities in which an enterprise operates.
General Counsel divisions must also advise their companies about the potential reputational, financial and operational risks associated with negative human rights impacts. As program panelist Jaren Dunning explained, his role as Senior Counsel for PepsiCo requires him to not “just say yes or no, but should we?, and how should we?” For PepsiCo, that means going beyond legal compliance to evaluating whether an action or decision meets the spirit of the business’s core objectives. Consequently, his fiduciary duty to PepsiCo obligates him to evaluate, manage and mitigate PepsiCo’s human rights risks.
To do this, advisors often look to both the SDGs and its complementary framework the UN’s Guiding Principles on Business and Human Rights (‘Guiding Principles’). The Guiding Principles, endorsed by unanimous vote of the Human Rights Council in 2011, identify the role of the private sector in understanding, preventing and mitigating its human rights impacts. As panelist Ariel Meyerstein of Citi explained, these principles draw on the legal obligation of due diligence. In his role as Senior Vice President, Corporate Sustainability, Meyerstein asks business clients probing questions about their human rights records and commitments.
Meyerstein explained that he uses the Guiding Principles as a normative framework for discussions around the corporate duty to protect, respect and remedy human rights, ensuring that the businesses he works with understand that these obligations extend throughout their global supply chain. He also advises clients seeking the social and sustainability bonds that finance specific initiatives, to ensure that the targets associated with this financing are sufficiently ambitious and achievable.
Diversity and inclusion practices sit at the heart of racial equity, and corporations are grappling with their sometimes dismal records. But Wilkins sees business as increasingly reflective about the racial make-up of the voices that contribute to strategic decisions. He believes it’s an exciting time, with lawyers able to advance this agenda in ways that would have been “unimaginable even a few years ago.”
And corporations are demanding diversity in-kind from the law firms they engage. Some even cut fees when firms fail to provide a sufficiently diverse team. Wilkins explained that the voices of counsel must connect to the core business strategy of its clientele, and a diverse legal team is an important way to achieve this.
Wilkins further explained that the use of diversity targets and disclosures must extend beyond new hires to retention and promotion. Measurement and disclosure exposes areas of inequity and offer powerful tools for lasting change. Wilkins sees annual reviews as a time to hold managing attorneys accountable for their diversity and inclusion efforts both within the firm and externally. Solutions that transfer wealth and influence from people in senior positions to those who have struggled to access these, offer the best hope, he says. Meyerstein supports this view noting that radical transparency around racial pay gaps, such as those undertaken by Citi, help drive efforts to improve representation.
Nevertheless, according to Dunning, sustainable corporations need to be thoughtful about how to build on their existing efforts. At PepsiCo, the Summer, 2020 protests prompted self-reflection about its hiring and training practices as well as their broader equity goals including gender parity since inequities can “sometimes compound themselves.” Externally, Dunning said, they considered whether they were “sufficiently engaging their minority-owned suppliers and nurturing that component of their value chain.” Finally, the company evaluated its advocacy role to see if there were ways they could engage in the political process. As a widely-known brand, he sees PepsiCo as having an opportunity to show consumers the future “we want to fight for.”
Dunning believes every lawyer can make a positive impact no matter what their role, but should be guided by their own personal interests. He recommends asking, ‘What questions do I want to answer?’ as a guide for involvement. Gordon echoed this view. “There’s room for this type of sustainability discussion no matter where you are in the marketplace.” But it’s the younger, newer voices that, from Wilkins view, are most critical in how we rethink equity issues. Wilkins sees the remote work necessitated by the pandemic as an opportunity to advance equity discourse. Because video-conferencing permits “everyone on a call to have an equal footprint”, new ideas and voices are being listened to in ways they weren’t before. He believes, and Gordon concurs, this creates an opportunity for young lawyers in particular to move the organisation towards discussions they care about.