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Online Vol. 106, Issue 4

Cornell Law Review Online

Racial Reckoning With Economic Inequities

Lisa M. Fairfax,  Alexander Hamilton Professor of Business Law, George Washington University School of Law

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23 Feb 2022

In response to the racial reckoning sparked by the police killings of George Floyd, Breonna Taylor and other unarmed Black men and women during the summer of 2020, many corporations publicly expressed their commitment to not only grapple with racial inequities in the economic sphere, but also increase racial diversity on their board, with particular emphasis on Black directors.11. See Kevin LaCroix, Growing Number of Companies Pledge to Address Board Diversity Issues, THE D&O DIARY, Sept. 10, 2020, https://www.dandodiary.com/2020/09/essays/corporate-governance/growing-number-of-companies-pledge-to-address-board-diversity-issues/ [https://perma.cc/2VZJ-GNUG] (“[A] number of public and private companies have committed to adding a Black director to their boards within the next year.”). Most notably, on September 9, 2020, The Board Challenge (founded by business leaders with at least one Black director) launched an initiative encouraging every U.S. company to sign a pledge agreeing to appoint at least one Black director to their board within the next twelve months.22. See The Board Challenge Launches Pledge For Companies to Add a Black Director to their Boards, BLACK ENTERPRISE, Sept. 9, 2020, https://www.blackenterprise.com/the-board-challenge-launches-pledge-for-companies-to-add-a-black-director-to-their-boards/ [https://perma.cc/S235-EWJK] (“Founding Pledge Partners commit to adding at least one Black director to their respective boards in the next 12 months); see also THE BOARD CHALLENGE, https://theboardchallenge.org/ [https://perma.cc/9H8C-C88N] (last visited on Sept. 6, 2021) (“The Board Challenge is a movement to improve the representation of Black directors in corporate U.S. boardrooms by challenging companies to take the pledge to appoint a Black director within the next year.”). As a result, several companies have committed to adding a Black director within the year.33. LaCroix, supra note 1; Anne Steele, Zillow, Nextdoor and Other Companies Pledge to Add Black Directors, WALL ST. J., Sept. 9, 2020, https://www.wsj.com/essays/zillow-nextdoor-and-other-companies-pledge-to-add-black-directors-11599649200?mod=itp_wsj&ru=yahoo [https://perma.cc/2WJB-DWTD] (listing companies that pledge to add a Black director in the next year); Catherine Thorbecke, More than a Dozen Companies Pledge to Add a Black Director to their Boards, ABC NEWS, Sept. 9, 2020, https://abcnews.go.com/Business/dozen-companies-pledge-add-black-director-boards/story?id=72900675 [https://perma.cc/2MBY-N8A9].

Embedded in these commitments and regulations is an implicit presumption that board diversity advances the call to promote racial equity in the economic sphere, particularly with respect to Black people. Confirming this presumption, one supporter of Nasdaq’s proposal proclaimed that Nasdaq was “heeding the call of the moment.”44. See Alexander Osipovich, Nasdaq Board-Diversity Proposal Wins SEC Approval, WALL ST. J. (Aug. 6, 2021), https://www.wsj.com/articles/nasdaqs-board-diversity-proposal-faces-sec-decision-11628242202 [https://perma.cc/B597-EYL6]; see also Nasdaq to Advance Diversity through New Proposed Listing Requirements, NASDAQ, Dec. 1, 2020, https://www.nasdaq.com/press-release/nasdaq-to-advance-diversity-through-new-proposed-listing-requirements-2020-12-01 [https://perma.cc/YDT6-8VQ7] (explaining the new listing requirements). This essay examines this presumption and argues that board diversity is a necessary though far from sufficient component of the movement to achieve racial equity in the economic sphere.55. See HEIDRICK & STRUGGLES, BOARD MONITOR US 2020 5 (2020), https://www.heidrick.com/Knowledge-Center/Publication/Board_Monitor_US_2020 [https://perma.cc/HC9Y-QT2H] [hereinafter Board Monitor 2020] (“Of course, simply ensuring a board has an appropriate mix of perspectives is just the start.”) This essay then argues that, notwithstanding promising momentum, there remain several significant roadblocks to achieving meaningful progress related to board diversity. Importantly, this essay argues that many of these roadblocks involve racial bias that is implicit but too often unchallenged, and hence insists that these roadblocks will remain unless there is intentional reckoning with this bias.

Part I maintains that board diversity is a critical aspect of racial equity for Black people in the economic arena. After highlighting the ways in which current reforms may advance the board diversity effort, Part II pinpoints the limits of reforms alongside the very real racial biases that continue to impede realistic progress in this area.

Because the 2020 summer’s racial reckoning related specifically to the mattering of Black lives, this essay focuses primarily on Black people—though its insights can be applied to other people of color.

To read this Essay, please click here: Racial Reckoning With Economic Inequities.

References

References
1 See Kevin LaCroix, Growing Number of Companies Pledge to Address Board Diversity Issues, THE D&O DIARY, Sept. 10, 2020, https://www.dandodiary.com/2020/09/essays/corporate-governance/growing-number-of-companies-pledge-to-address-board-diversity-issues/ [https://perma.cc/2VZJ-GNUG] (“[A] number of public and private companies have committed to adding a Black director to their boards within the next year.”).
2 See The Board Challenge Launches Pledge For Companies to Add a Black Director to their Boards, BLACK ENTERPRISE, Sept. 9, 2020, https://www.blackenterprise.com/the-board-challenge-launches-pledge-for-companies-to-add-a-black-director-to-their-boards/ [https://perma.cc/S235-EWJK] (“Founding Pledge Partners commit to adding at least one Black director to their respective boards in the next 12 months); see also THE BOARD CHALLENGE, https://theboardchallenge.org/ [https://perma.cc/9H8C-C88N] (last visited on Sept. 6, 2021) (“The Board Challenge is a movement to improve the representation of Black directors in corporate U.S. boardrooms by challenging companies to take the pledge to appoint a Black director within the next year.”).
3 LaCroix, supra note 1; Anne Steele, Zillow, Nextdoor and Other Companies Pledge to Add Black Directors, WALL ST. J., Sept. 9, 2020, https://www.wsj.com/essays/zillow-nextdoor-and-other-companies-pledge-to-add-black-directors-11599649200?mod=itp_wsj&ru=yahoo [https://perma.cc/2WJB-DWTD] (listing companies that pledge to add a Black director in the next year); Catherine Thorbecke, More than a Dozen Companies Pledge to Add a Black Director to their Boards, ABC NEWS, Sept. 9, 2020, https://abcnews.go.com/Business/dozen-companies-pledge-add-black-director-boards/story?id=72900675 [https://perma.cc/2MBY-N8A9].
4 See Alexander Osipovich, Nasdaq Board-Diversity Proposal Wins SEC Approval, WALL ST. J. (Aug. 6, 2021), https://www.wsj.com/articles/nasdaqs-board-diversity-proposal-faces-sec-decision-11628242202 [https://perma.cc/B597-EYL6]; see also Nasdaq to Advance Diversity through New Proposed Listing Requirements, NASDAQ, Dec. 1, 2020, https://www.nasdaq.com/press-release/nasdaq-to-advance-diversity-through-new-proposed-listing-requirements-2020-12-01 [https://perma.cc/YDT6-8VQ7] (explaining the new listing requirements).
5 See HEIDRICK & STRUGGLES, BOARD MONITOR US 2020 5 (2020), https://www.heidrick.com/Knowledge-Center/Publication/Board_Monitor_US_2020 [https://perma.cc/HC9Y-QT2H] [hereinafter Board Monitor 2020] (“Of course, simply ensuring a board has an appropriate mix of perspectives is just the start.”
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