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Corporations large and small expressed their outrage, dismay, and horror at the killing of George Floyd, and pledged to fund black organizations, charities, diversity training and more. But Twitter users soon cut to the heart of the matter: 'Thanks for pledging but let's see a photo of your board of directors.'

The point is backed up by statistics that reveal the truth most Americans already know: Corporations are largely run and directed by those who are "male and pale." In a 2018 report, for example, the total number of board seats for Fortune 500 companies was 5,670 — but only 651 board seats were held by minority men and 261 board seats were held by minority women. The breakdown by race looked like this:

83.9% or 4,758 seats held by Caucasian/White board members
8.6% or 486 seats held by African American/Black board members
3.8% or 213 held by Hispanic/Lantino(a) board members
3.7% or 209 held by Asian/Pacific Islander board members
0.1% or 4 held by "other"

The report noted that the percentage of seats held by minorities in 2018, though small, had increased and revealed "more growth in representation between 2016 and 2018 (1.7 percent) than between 2012 and 2016 (1.1 percent) — which was twice as many years."

This is not to say that companies aren't serious in their declarations of support against racism and racial inequality. But what those on social media were pointing out was that actions that dig at the roots of systemic racism are as or even more important than short-term donations and expressions of outrage. Walk your talk, companies were being told.

In the financial industry this spring, the growing interest in investing based on environmental, social, and governance criteria was confirmed as ESG investments outperformed non-ESG investments during the economic shutdown caused by the pandemic.

But now, also thanks to the pandemic – to the "bad" and "good" behavior companies have displayed in regards to protecting their employees, to the newfound awareness of the fact that the pandemic killed a disproportionate number of black Americans – and to the awareness and outrage triggered by the killing of George Floyd, investing in companies that have their "social" and "governance" practices and policies in superior shape has attracted the attention of the media and investors.

Although ESG has more frequently been associated most with environmental criteria, evaluating and recognizing companies whose policies and practices encourage diversity and inclusion has become as important as climate change factors.

However, there is much room for improvement.

'This is an ESG problem'

That message was hammered home in a blog post by Calvert Research and Management president and CEO John Streur. Calvert is an investment company that works in what is termed "responsible Investing." In the post, Streur took ESG investors, non ESG investors, and the corporate world to task for not having done enough to combat racism.

"It is time for investors to recognize this issue for what it is: a system-wide failure that our government is complicit in fostering and that violates the Constitutional rights and human rights of black people. And let us call it what it is: racism," Streur wrote.

He called on companies to make public the races of their board members and executives, as well as disclose how equitable company pay is for both race and gender.

"Let us also be clear: This is an ESG problem," he wrote, and investors must do better at identifying companies that simply talk diversity and inclusion versus those that actually set goals and achieve outcomes that increase diversity and inclusion.

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Investors, step up: Racism is an ESG problem, CEO says

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