Driving change towards racial equity

Driving change towards racial equity

Introducing Our Panel

Led by Nick Hutton, Head of BlackRock’s UK Wealth business, our latest BlackRock Insight Series webinar was on the subject of racial equity, both at BlackRock and in the wider financial-services industry. For our discussion, we were joined by the following panel members, all of whom gave us personal and moving accounts of their relationships with how society and the workplace deal with race.

Gavin Lewis, Head of the UK Local Government Pensions Schemes
Tiffany Perkins-Munn, PhD, Head of Research, Analytics and Data for Global Marketing
Rebecca O’Toole, Head of EMEA Human Resources

Below, we cover some of the main points of the discussion on racial equity at BlackRock and the financial services industry at large.

Racial Equality and the Financial Services Industry Today

Financial services must do better

Following the events of recent months, now is the time to shine a light on racial equality and justice. We have all been saddened and angered by some of the things we have seen in the media, especially during this pandemic, with the killing of George Floyd in the US a focal point for many. We at BlackRock have been heartened by the public reaction and, more importantly, the desire to grow and learn. In our industry, we need to do our bit too, and that means addressing underrepresentation. In the UK, black employees make up just 1% of our workforce and, across the country, there are only 15 black portfolio managers across the country.

In the US, across the entire workforce, things, on the surface, look somewhat better. 40% of the financial-services workforce is non-white, which is in line with society as a whole. However, that representation drops by 75% when we only consider those in management. And black people, in particular, are half as likely to be promoted to senior manager or senior vice president than their white peers.1

Racial Equity Webinar Series

Racial equality can lead to better business outcomes

In time, if we don’t make changes, not only will the industry appear outdated and unable to reflect society as a whole, but there may actually be an economic cost. During our webinar, Tiffany pointed us to a report conducted by McKinsey in collaboration with the Kellogg Foundation, which examines racial equity and better business outcomes.

In the US, it was found that for every 10% more racially or ethnically diverse a company’s senior team, earnings before interest and taxes were almost 1% higher.1 These outcomes, more broadly, tie into the demographic make-up of the US, which is rapidly changing the talent pool companies are fishing in – it’s becoming younger and more diverse. Indeed, it’s striking that the average age of a white person in the US is 58 and the average age of a person of colour is 27.1 This younger demographic is also becoming a major part of financial-services companies’ customer base, and they want to see themselves and their values reflected back at them by the companies they choose to invest with.

The report concludes that by 2050 – less than 30 years from now – the US could gain $1 trillion in GDP, just by closing the racial equity gap.1

1Racial equity in financial series - McKinsey & Company, 10 September 2020

How is BlackRock Committed to Change?

BlackRock is on a journey to understand why representation in the industry is so poor – in terms of both societal and business outcomes – and what can be done about it. Our aim is not only to increase representation but also to improve the employee experience for underrepresented populations. Tiffany explained how BlackRock is focusing on the following areas:

Talent and culture

We’re trying to talk to our people in ways we have never done before. Because it’s about more than ticking boxes and putting schemes in place, we want to understand and tackle these systemic challenges. Some of our key initiatives include the following:

  • Conducting enablement sessions with 1,400 people managers across the business – solely to support the conversation on race and equity.
  • Launching sponsorship programs for senior black leaders and career-development programs for staff.
  • Signing the Race at Work Charter in the UK. We also expanded our diversity data disclosures in the UK, setting the example for parts of the business in other countries.
  • 100% of US vacancies must have racial and gender diversity on the hiring slate.

 

Racial Equity Webinar Series

Our role as a fiduciary

We aim to maintain relationships with providers that promote diversity:

  • We’ve created programs to increase our connections with broker and dealer firms that are owned by under-represented groups, including women and disabled veterans
  • And we’re looking for opportunities across private markets to invest in businesses that are either held by, or serve, black, Hispanic and Native American communities
  • From an investment-stewardship perspective, we’re engaging with companies on the racial and ethnic diversity of their boards.

Policy and social impact

Some of the important commitments we’ve made:

  • We are supporting Black and Latinx nonprofit and social entrepreneurship by contributing $1m to the Echoing Green Global Racial Equity Fund and $500,000 to the Robin Hood Power Fund.
  • We provided $2m to the Harlem Children’s Zone Covid-19 Relief and Recovery Project focused on 5 critical areas, including health and education, in seven cities across the US.
  • We deployed $1.5m to local, grassroots organizations with the help of employee-led task forces across four cities with plans to expand to other cities in the US and the UK.
  • We matched employee donations 2:1 for nine non-profits focused on racial justice and equity, deploying $2.5m in June.

All amounts given in USD

How Do We Remain Accountable?

We have a longstanding commitment to inclusion and diversity – and a number of initiatives in place – but that commitment has to be about more than just words. And that’s why accountability starts at the top and work its way through the business. Through the following programs, we are constantly challenging and educating ourselves:

  • Ask-Me-Anything sessions – Led by CEO Larry Fink, we have been holding Ask-Me-Anything sessions on the issues of racial equity at BlackRock
  • Black Professional Network – Senior Managing Director Rich Kushel has been appointed the leadership sponsor of our Black Professional Network, which has tripled in size since June
  • Dialogue with other offices – We have also been holding conversations with leaders across Europe to talk about what these initiatives mean for them.
  • Quarterly Business Review Process – where we explicitly look at diversity, equality and inclusion. This review happens a few times a year, allowing our leaders review their progress against BlackRock’s goals.
  • Learning Out Loud Series – This is how we continue our discussion on racial equity with the whole organisation. Learning Out Loud was launched in conjunction with leaders who have dedicated their careers to tackling the challenges around racial equity.

Our New Joiners Policy

We also discussed how BlackRock is engaging with the topic of racial equity with new recruits, as well as existing employees. In fact, BlackRock has just welcomed its most diverse global program analyst class to date, while also building a strong pipeline for the future. For new joiners, we’ve been running sessions dedicated to racial equity, including master classes on our BlackRock Academy – we’re also inviting people across the company to be part of these. And to ensure that we give our staff the best insights available, we are using a mixture of internal and external resources.

In addition, with our on-boarding processes, we’re making sure that employees are also on-boarded into our culture. They need to understand the BlackRock principles – including diversity and equality – which are among the foundations of our business and will drive our competitive edge.

Like a lot of financial services companies, when it comes to racial equity, BlackRock is on a journey – we’re learning and we’re inviting the whole company and the whole industry to come along with us. We believe this is the best way to drive change.