A state treasurer has convinced the big banks to commit billions of dollars to tackle racial inequalities. Here is the result.
In an effort stemming from the murder of George Floyd and at the behest of a Connecticut state official, a who’s who of financial institutions on Tuesday pledged to tackle the effects of racial disparities in financial services by investing billions dollars to support black and Latin communities. .
Eighteen banks and asset managers have made four main commitments over the next five years: $ 10 billion to minority-owned businesses through contracts, financing and more; investments in black and Latin communities through regional and thematic initiatives; put money into the financial services talent pool to tackle under-representation; and transparency around diversity, equity and inclusion.
Financial institutions on board include BlackRock Inc. BLK,
Morgan Stanley MS,
Goldman Sachs Group Inc. GS,
Bank of America Corp. BAC,
and Citigroup Inc. C,
They are partnering with the Connecticut State Treasurer and the Ford Foundation on an initiative called Corporate Call to Action: Coalition for Equity & Opportunity, which was officially launched last fall but is now announcing its main objectives. They call it the CEO Coalition.
The far-reaching initiative comes as many banks face pressure from shareholders and others to follow through on expressions of solidarity last year with the Black Lives Matter movement, which emerged after Floyd, a black man, was killed by a Minneapolis police officer. Derek Chauvin. Chauvin was convicted of the murder last month.
See: Businesses said ‘black lives matter’ last year, and now they’re being asked to prove it
Connecticut State Treasurer Shawn Wooden, the driving force behind the alliance, wrote an op-ed last year, following Floyd’s death in May, calling for action from powerful, deep-pocketed institutions. A black man and father of two black teenagers, Wooden wrote in the Hartford Courant that government, law enforcement, and social and financial institutions have failed to address the “existential crisis” of the murder of blacks. armed: rich and privileged to start pulling the levers of power they hold. Wall Street and American businesses, I’m talking to you. “
In an interview with MarketWatch, Wooden said his editorial garnered a positive response from CEOs at companies across the country. He took advantage, contacted the Ford Foundation and the Coalition of CEOs was born.
âI have a front row seat on Wall Street,â he says. “I have these relationships and I have the opportunity to make lasting changes.”
Sixteen of the alliance partners have pledged to publicly release their EEO-1 reports, a breakdown of their membership and leader demographics filed at the federal level – a metric that tracks internal progress. Now come the four main commitments, which deal with both internal and external issues.
âIt had to be more than just a moment of nice statements, quite frankly,â Wooden said. âIt had to be a real commitmentâ¦ where the work would last beyond the present moment. And we wanted to be able to measure results. “
As Wooden’s office and the Ford Foundation lead the charge, they are responsible for keeping the initiative on track and reporting on progress towards the initiative’s goals over the years, although it there are working groups focused on each of the commitments.
âThe real challenge for American businesses is to keep the momentum going,â said Darren Walker, president of the Ford Foundation. âWe have seen genuine and sincere efforts. We have also seen performative acts. What the treasurer and I want to see is a follow-up. “
The banks involved say the move is part of the job they have been doing for some time. Ebony Thomas, senior vice president of ESG and public policy and head of initiatives for racial equity and economic opportunities at Bank of America, and Joe Gianni, president of Bank of America for the Hartford market, spoke about the previous commitments and actions of their bank.
âIt’s obviously magnified,â Thomas said. “The urgency was different.”
Gianni spoke about a more than $ 1 billion commitment that Bank of America made to racial justice last year and gave examples of how it has worked so far, citing partnerships. with different organizations for manufacturing jobs and with the state for jobs in the health sector. The âreal jobs at the end of the tunnelâ don’t have to be financial services jobs for the bank to invest in them, he said.
Bank of America and other financial institutions have invested substantial sums in these types of initiatives, but B. of A. this year opposed a shareholder resolution asking it to conduct a fairness check. racial. That proposal included mentioning the bank’s less than stellar track record in approving minority home loans, and the lack of diversity in its C-suite.
Rashad Robinson, president of the racial justice organization Color of Change, advocated and successfully lobbied for racial equity audits at Facebook Inc. FB,
and Airbnb Inc. ABNB,
and was not impressed.
âAny attempt by the banks to try to find their way into our good graces will fail,â he said. “Trying to trick things into donating the billions they have extracted from our communities for decades – after they withheld much needed federal relief funding for our businesses at the height of a global pandemic – is a special type of performance art. . “
See: Citigroup, Wells Fargo, Bank of America, Goldman Sachs and JP Morgan urge shareholders to vote against racial equity audits
But Thomas said Bank of America was already transparent about its efforts on racial justice, equity, diversity and inclusion.
âThis year, we released a human capital report for the second year in a row,â she said. âWe know that people, not just shareholders, but others – and our employees – are asking for transparency.â
Gianni added that Bank of America has been releasing its EEO-1 report for years.
The other members of the coalition are State Street Global Advisors STT,
UBS Group UBS,
T. Rowe Price Group TROW,
Aberdeen Standard Investments, AllianceBernstein AB,
Bridgewater Associates, Franklin Templeton, Invesco Ltd. IVZ,
Schroder Investment Management North America Inc., The Hartford, Teachers Insurance and Annuity Association of America (TIAA), Vista Equity Partners and Wellington Management.
Coalition partners see collective action as key and the role of financial institutions in the economy as paramount.
âOne of the reasons we have big disparities in wealth is the lack of capital,â said Wooden, the state treasurer. “Capital is oxygen.”