Debbie Tembo is managing director of the Black British Business Awards
Stories of racism do not surprise me anymore. For years I have worn a mask of resilience and politely shared encouraging words with business leaders in the hope that change will follow. But, like many who have walked this path before me, I am tired.
I am tired because I have spent 2020 guiding my white allies through a year in which we were all reminded of the racial and ethnic inequalities still rife in our societies and public institutions. I am tired from mourning those who have suffered unjust deaths at the hands of the pandemic and the authorities.
I am tired of the empty pledges on the race agenda, the public articulation of good intentions, pledges of support and government-backed targets which contrast starkly with statistics which barely move the needle – or worse still, are sliding backwards. I am tired because whilst I am safe in the knowledge that optimising talent and opportunities for ethnic minority groups – as with all historically disadvantaged groups – is the ethical thing to do, many still refuse to action the bare minimum.
I am not here to prove that racism exists – this you can do on your own. I am here to explain how an investor-led diversity movement has the power to drive positive change, the type that will ripple through every level of business and society. It will take concerted effort to end the deeply embedded inequalities that exist in our world, but I have no doubt that a small group of committed citizens can change the world.
Captains of industry have long failed to stand up about race and there are few who consistently held themselves accountable. The truth is that until something threatens a company’s access to capital, pledges will remain empty and action will be delayed, no matter how morally urgent the situation may seem.
Businesses are hesitant in taking on purpose in addition to profit due to an ill-founded theory that activating such a strategy would have a negative impact on returns. In fact, only 38% of board members think ESG issues have a financial impact on a company. It is likely that this same group of people view diversity and inclusion commitments only as a risk mitigation strategy – these are the people who will be missing out on the opportunity to increase returns.
For those who are concerned that taking on purpose in addition to profit could have a negative impact on the bottom line, the latest studies are putting that theory to bed. A white paper published in 2020 found that companies at the top of the ESG rating scale weathered the pandemic better than those with weaker ESG ratings. From an investor’s point of view, companies or funds which show resilience under extreme crisis are extremely valuable.
Amongst the forces which shaped the acceleration of the ESG asset class in 2020 was the rise of consumer capitalism. The Black Lives Matter Movement (BLM) ricocheted around the world and suddenly, brands were held under a microscope by consumers and employees who expected answers from the titans of industry.
A study by Edelman exposed the scrutiny: 60% of consumers said they would boycott a brand based on its BLM response and 73% of consumers said they would stop purchasing from a business that didn’t disclose its stance on social justice.
The days of being able to depend on a solid product offering and quality consumer service are over. Today’s consumers and employees are voting with their pocketbooks and placing purpose higher on the chart than profit.
The investor link has the power to hold businesses to account with a unique pocketbook of its own. Investors must invest in black founders. Invest in them because discussions which lack a black perspective are incomplete. Invest in them because they have insight into issues you do not and, if you are white, never will. Solidify your commitment to pro- grammes that support minority ethnic founders and accept that if you do not, you are falling short of your role as an ethical leader.
You must hold everyone in your portfolio to account and ensure they take a stand against racial injustice in a way that is authentic. Ensure pledges are followed by programmes of acceleration for minority ethnic talent and set targets that speak the language of business, because storytelling alone will do nothing but paralyse progression.
After all, it’s time to hold up your own mirror too. More than 80% of venture capital firms don’t have a single black investor. Firms without a diverse investing staff will remain in a catch-22 cycle of white fund pledges and they will also fall short of the commitment for which they are holding others accountable.
It is time for the investment community to step up, take intentional action and lead the race to equity.