British firms are being shamed into acknowledging their links to the slave trade, and showing they are serious about combating racial inequality. Imagine how much greater these efforts might be if there was systematic pressure on the corporate sector to come clean about its history and make society fairer.
This week U.K. pubs group Greene King said it was inexcusable that one of its founders profited from slavery. It promised a “substantial investment” to benefit Black, Asian and minority communities, both through its businesses and working with charity partners. The move came after the Daily Telegraph newspaper highlighted the involvement of various U.K. company founders and former directors in slavery, using data from University College London’s Centre for the Study of the Legacies of British Slave-ownership.
Lloyd’s of London, one of the institutions that was named, said it was sorry for the role it played in the slave trade of the 18th and 19th centuries — “an appalling and shameful period of English history, as well as our own.” It also promised financial support for charities and organizations promoting opportunity for Black and other minority groups, though no amount was specified. The Bank of England said that while it was never directly involved in the slave trade itself, it apologized for “some inexcusable connections involving former Governors and Directors.”
A pattern is emerging. When they are forced, companies and institutions reveal a far more complicated version of themselves than the one typically portrayed in their marketing. How have they got away with it for so long? It has taken the global outrage at the killing of George Floyd to bring these issues to the fore.
If a company was found to have misstated its reported numbers, it would face sanctions from investors and regulators. There is an argument here for formally obliging companies to reexamine their past, share the results and use the findings to inform present-day action against racism and in favor of equality and fairness.
A simple step would be to make it a regulatory requirement for firms to detail their approach to fairness and equality generally, and racial inclusion specifically, in their annual filings alongside existing governance disclosures around pay and so on. This could include data on minority representation at various levels of a company, and a narrative explanation of a firm’s contributions toward creating a better workplace and society. It would also be the place for the unvarnished historical context.
Shareholders could have a so-called advisory vote on these disclosures (as they do, in the U.K. on aspects of pay) — a simple public endorsement, or censure if the information is too thin. The reputational risk involved would be an incentive to take this part of the financial report seriously.
Companies cannot be allowed to just update their websites, make a one-off donation to a charity and consider it job done. This requires sustained action. It involves investing in improving the experience of the company’s staff and customers from minority communities. For example, could more money go toward making unconscious bias training compulsory at all levels? Such investment could help identify and eliminate microaggressions — remarks or actions that harm minority groups, which the majority often doesn’t notice. Witness the BOE’s pledge to remove from display any images of former governors and directors who were involved in the slave trade.
Yes, some companies do seem to be moving forward along these lines. But many are being shamed into it by being called out on an individual basis. A broader initiative is surely needed. Investors and regulators have the power to hold bosses to account year in, year out for delivering change.
Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.