Abstract

Excerpted From: Ferrell L. Littlejohn, Corporate ESG Falls Short: Systemic Anti-Black Racism and Inequality Should Be Addressed Through a Cumulative Integrated Approach, 29 Fordham Journal of Corporate and Financial Law 695 (2024) (422 Footnotes) (Full Document)

In the years since George Floyd's murder at the hands of Minneapolis police, an intense assessment has followed concerning race relations in America and globally, sending ripples through every fabric of society. Although the world's past of anti-black racism and state- sanctioned violence was never truly the past, George Floyd's murder and other police murders of innocent black men, women, and children seemed to reintroduce the term “systemic racism” into the global mainstream. Now more than ever, academics, corporate board members, and average citizens alike have begun to reflect on the factors that have created the environment we live in today. Indeed, activists and leaders around the world are calling for structural and institutional reform to eliminate anti-Black racism and racial inequality.

Considering the past tragedies and enduring anti-Black violence, advocates for racial justice have started to scrutinize the policies and practices of large commercial institutions. In recent years, scholars have argued these policies and practices helped to develop--and continue to perpetuate--anti-black racism. In fact, recent scholarship on finance, accounting, management and technology have allowed academics to understand how American and global economic development is inextricably tied to “slavery's capitalism.” Historically, scholarship has reflected capitalism's “concurrent and mutually reinforcing” relationship with abolitionism. However, newer studies highlight “the material and ideological convergence of capitalism and slavery in the dynamic emergence of long-distance markets for financial securities, agricultural commodities, and labor power.” Many are carefully examining America's post-Civil War choices: after Congress passed the Thirteenth Amendment which purportedly freed enslaved people, it declined to move forward with any other form of atonement for the hundreds of years of torture and free labor that helped make the nation what it is today. America--realizing the vitality of southern agriculture and the Black labor force to the post-Civil War economy--chose instead the economic oppression, disenfranchisement, and racial segregation of Black people. As a result, slavery's institutions continue to reverberate throughout modern society. Today the collective wealth gap among Black and White Americans is said to be “at least $14 trillion” because of slavery and the exclusionary capitalist wealth-building opportunities that survived its formal demise.

Many are coming to understand that racial equality does not begin and end with criminal justice reform and the eradication of police brutality; instead, economic justice for Black people is an essential part of the formula for leveling the playing field. Black people currently face discriminatory hiring and lending practices, wage inequality, and microaggressions in the workplace, to list a handful of concerns. In America's post-Trump era, blatant White supremacy is on the rise, and racial tensions are mounting. It seems, as one scholar remarked, capitalism is operating comfortably--or supplying the kindling--in a “world on fire.”

As such, global corporations have been encouraged, if not forced, to address anti-black racism and injustice at domestic and global levels. Many of these corporations have relied on environmental, social and corporate governance (“ESG”)--which addresses costs to stakeholders in doing business--to combat the above-mentioned issues. Moreover, corporations have centered these ESG efforts on policies like customer-facing corporate philanthropy and internal diversity, equity and inclusion (DEI). Still, at least two $50 billion questions remain: how far are corporations willing to go to eradicate anti-black racism, and is it enough?

Many academics believe reliance on this type of corporate self-policing is at best idealist, and in reality, naive and uninformed. These individuals largely emphasize issues stemming from corporations' ultimate accountability to its shareholders, among other things. This view persists although large corporations are overwhelmingly owned by investment funds, which have stewardship/proxy voting guidelines addressing DEI issues including board diversity. The academics rightly approach corporate self-policing with skepticism. This Note posits that reliance on internal corporate initiatives is insufficient when, time and time again, capitalistic institutions have opted to prioritize power and profit over Black lives.

In addition to promoting ESG to combat anti-Black racism and racial inequality, activists should focus on four areas, the first two of which place onus on local, state, and national governments:(1) government-sponsored reparations programs; (2) legislation to overhaul systems that reinforce racial inequalities; (3) BlackAmericans' participation in the stock market; and (4) a redirection of buying power and capital to Black entrepreneurs to accelerate racial equity. As this Note reveals, racism is not confined to social issues or exceptionally bad actors; it permeates every facet of American society, and addressing it demands multiple approaches beyond corporate pledges and DEI initiatives. The proper approach should acknowledge the necessity for social, policy, and economic reform to address anti-Black racism and inequity. Not only could such an approach help combat racism and level the playing field for Black people, but it could also improve conditions for all people living below the margins, regardless of race.

Part I of this Note explores the links between slavery and capitalism--a historical backdrop necessary to help the reader develop a sense of the complexities underlying anti-black racism, as well as understand how ESG fits within the context. Part II examines ESG in its present state, attempting to explain why it is ultimately insufficient to address anti-black racism and inequality in a sustainable way. Finally, Part III advocates for a cumulative approach to address anti-black racism and inequality.

[. . .]

This Note explored the links between slavery and capitalism, providing the context necessary for understanding the complexities of anti-Black Racism and inequality. In light of that context, this Note examined the different ESG tools that federal and private actors have implemented to combat anti-Black racism and inequality. This Note identified various flaws among those ESG tools, articulating why they fall short in addressing anti-Black racism and inequality. This Note argues that Americans would be better off addressing anti-Black racism from a cumulative, integrated approach when, time and time again, capitalistic institutions have and will likely continue to prioritize power and profit over Black lives. This Note suggests that instead of relying on corporate ESG to combat anti-Black racism and inequality, activists should focus on promoting (1) government-sponsored reparations programs;(2) legislation to overhaul systems that reinforce racial inequalities;(3) BlackAmericans' participation in the stock market; and (4) a redirection of buying power and capital to Black entrepreneurs in order to accelerate racial equity.

By employing the above approach, we could leverage a more diverse and comprehensive solution to address anti-Black racism and inequality. Because slavery's legacy and institutions are so deeply entrenched in society, it is hard to see a clear path to an equal, anti-racist society. However, if we remain persistent and consistent in demanding institutional change and continue investing in Black people, we may get somewhere.

J.D. Candidate, Fordham University School of Law, 2024; B.B.A., University of Oklahoma, 2014.