Saadia Zahidi, managing director of the World Economic Forum (WEF), points out this poignant fact: just 1% of Fortune 500 companies are led by Black chief executives. She highlighted the statistics this week as the WEF launched a coalition of 48 international companies committed to racial and ethnic equality in the workplace.

Chief among the specific aims of the project, known as Partnering for Racial Justice in Business, is putting “racial and ethnic equity on the board agenda”.

Part of the virtual Davos conference, the launch comes after corporates across the US and elsewhere responded to the Black Lives Matter protests that erupted around the world following the death of George Floyd in May last year. Members include an impressive roster of boardroom members from companies including AstraZeneca, PepsiCo, Unilever, BlackRock, IKEA and the Boston Consulting Group, among others.

“With just 1% of Fortune 500 companies led by Black CEOs, the need to tackle racial under-representation in business is urgent and obvious,” says Zahidi.

“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.”

The UK’s boardrooms have been examined too, with many found lagging. Last year when the Parker review looked at FTSE 100 boards 37% had not a single member from an ethnic minority. In 2017, when the review launched, FTSE 100 boards were challenged to have one ethnic minority member by 2021 or “one by 2021”.

Commitment to equality

This week corporate leaders who have joined the WEF coalition offered their take on how to increase equality. Alan Jope, chief executive of Unilever, says it needs deliberate action.

“Creating a diverse and inclusive organisation requires intentional advocacy to combat racism and elimination of unconscious bias. It requires leaders to commit to dismantling barriers to an equitable culture,” he says.

Béatrice Guillame-Grabisch, global head of HR for Nestlé, says joining the campaign is an opportunity to “learn from our partners and continue challenging ourselves to do better”.

Companies joining the campaign are not only asked to place racial and ethnic equality in the boardroom. They are also asked to make one firm commitment toward racial and ethnic justice in their organisation and set a long-term strategy to become an anti-racist organisation.

Though broad in its objective, the campaign will focus initially on Black inclusion and confronting “anti-Blackness”. A statement from the WEF says a “broad brush” approach to racism fails to grasp its effects on different groups, hence a “targeted and specific” approach.

Observers worry that forcing diversity at the top of organisations can be problematic. Dev Modi, an expert with the consultancy Equiida, says there is a risk of “tokenism” and organisations need to invest at grass roots levels to ensure lasting change. He believes focus needs to be on psychology and culture in the workplace.

“When I challenge poeple to provide evidenc of systemic racism their examples to refer to individuals not applying the systems and process already in place. In which case, the focus should be on the individuals not on the processes.” Networking opportunities for those from “less visible” groups should be introduced, says Modi, to “naturally build the connections for opportunities to present themselves in a more organic way.”

But there remains a strong velief in a boardroom focus on racial equality. “Many organisations,” says Doyin Atewologun, an adviser to the Parker Review, “are structured such that strategy and directives for change come down from the board. Thus the quickest way for this organisational change to happen is if it flows through the same channels.”

But voluntary action alone might not be enough to bring about the kind of change the WEF wants to see in every jurisdiction. Doyin believes legislation helped with the campaign to change gender representation on boards in some jurisdiction while others responded better to “informal peer or competitor pressure”.

“One approach could be to rely on informal influence with the warning that if a certain pace of change isn’t maintained over a certain number of years, government may need to intervene,” she says.

Investor pressure

The WEF is not the only organisation taking aim at equality issues and placing the topic on corporate agendas. This month global investor State Street, with $2.7trn under management, said it would vote against any FTSE 100 or S&P 500 nominations or governance committee that fail to disclose the racial and ethnic composition of their board. Next year it says it will vote against chairs of those committees if their boards fail to have “at least” director from an “under represented community”.

Last year Legal & General Investment Management said it would vote against nominations committee chairs “if they fail to meet expectations on ethnic diversity”.

While investors look to be using a stick to drive companies to resolving some racial equality issues the WEF has chosen collegiate approach. Both may be required to make things better.