Whether it’s the health and welfare of employees in a pandemic or a spotlight on anti-Black racism following the police killing of George Floyd in Minneapolis, 2020 has been a year in which social issues are suddenly front and centre at businesses. For many IROs, discussing social issues may demand more delicacy and finesse than talking about cut-and-dried topics like EBITDA or quarterly earnings.
Wes Hall, Executive Chairman and Founder of Kingsdale Advisors in Toronto, is convinced that IROs have no choice but to wade into difficult conversations. He cites data from Toronto showing that Black people and other People of Colour make up 83% of reported coronavirus cases, but only half of Toronto’s population.
“Social issues need to be top of mind for business leaders right now,” says Hall. “If you’re a company, don’t you think those numbers are going to have a material impact on your business in the future? Your Black employees are going to be sick more and their death rates are higher.”
This summer, Hall responded to anti-Black systemic racism by working with other high-profile Bay Street executives to launch the BlackNorth Initiative. As of August, 30% of companies on the TSX 60 have signed the BlackNorth pledge to work to end anti-Black racism, with the total market cap of committed organizations exceeding $1 trillion. Alongside Bank of Montreal, Blackberry, TELUS, Scotiabank, and other major companies are influential investors such as the Ontario Teachers’ Pension Plan and prominent law firms and chambers of commerce.
Chaya Cooperberg, Chief People and Communications Officer at AmTrust Financial, splits her time between the U.S. (New York City and Cleveland, Ohio) and Canada (Toronto), and has witnessed a sea change in how companies grapple with racial injustice and other social issues. She says: “In the aftermath of the murder of George Floyd, when all the protests were taking place, I think a lot of companies were suddenly faced with the challenge of ‘speak up’ or ‘let your silence speak for you.’”
She continues: “I think it’s really important for companies to have the strength to stand up and say: ‘We can do better. We should do better. And here’s what we’re going to do to make things better.’”
Focusing on the ‘S’ in ESG
Although issues of race may be making headlines, most investors are not phoning IROs with burning questions about diversity and inclusion. “I have not yet received questions on the topic of racial issues from an investor,” says Yaniv Bitton, Vice President, Investor Relations, for Sun Life Financial in Toronto. “That is not to say I won’t in the future. Fifteen years ago, investors did not ask us about our sustainable investing strategy. Now that topic comes up more often.”
All the same, Bitton believes in presenting investors with a full picture of how his company is addressing the social issues of the day. At Sun Life’s second quarter earnings call, the company included a slide on community engagement that highlighted steps taken to further diversity and inclusion goals. “We want to put it in front of all the stakeholders who might be listening to our call, so they know how we feel about these important topics,” he says.
Bitton has also found other ways to showcase social issues. In the first quarter earnings call, the company featured a slide on Sun Life’s support for communities during the pandemic, and he regularly updates sustainability information for the slide deck he takes to one-on-ones with investors. “These conversations,” he says, “are important to have.”
Bitton’s experience reflects the widespread sense that the social component of ESG is often neglected.
“People still think the ‘S’ is corporate philanthropy and not the kind of real operational ‘S’ that can impact the company’s bottom line with everything from human resource questions to community relations questions,” says Michelle de Cordova, Principal in the Vancouver office of ESG Global Advisors. “The ‘S’ in ‘ESG’ includes some of the most critical things to a company’s success.”
Isabelle Adjahi, a seasoned IRO who until this spring was Senior Vice President, Investor Relations and Communications, for WSP in Montreal, notes that only within the last year had she begun to discuss with investors “the full range of ESG.” Adjahi attributes fresh appreciation of the ‘S’ in ESG to the coronavirus: “COVID is forcing us to change over the long term. When it comes to focusing on people and communities and not just financial metrics, that’s here to stay. The way we work as investor relations officers is going to evolve.”
Adjahi has found some persuasive ways to convince Board directors and the C-Suite that ESG matters to investors, even if they are not necessarily demanding answers on these topics.
“I believe that the right way to do any ESG program is not to say, ‘I’m going to do this or that,’ but to ask your stakeholders what they want to see done,” Adjahi explains. At WSP, she recalls, she would plant questions about ESG and diversity and inclusion in perception studies. “I’d ask stakeholders: ‘What do you think the organization should focus on? If [ideas] come from me, Isabelle, top management may say, ‘Okay, fine,’ and then put it to the side. But when it’s coming from our investors or our clients, then they listen to what’s being said.”
Measuring Progress
One key aspect of the BlackNorth Initiative is that it asks companies to commit to specific and measurable goals. “If Blacks are 3.5% of the population in Canada,” says Hall, “then 3.5% of your executive suite and your boardroom should be Black.”
As a Black IRO, Adjahi says she is one of only three or four other Black IR executives in Canada. She is adamant that pledges like BlackNorth’s not be considered a way to do people of colour “a favour.”
Rather, Adjahi maintains that diversity and inclusion are ways to ensure “that we leverage all the opportunities that society has to offer.” She continues: “These are ways to be a better culture and a better company, and that will have an effect on valuation. At the end of the day, your pockets are going to benefit, as well.”
Bitton notes that Sun Life, which signed the BlackNorth pledge, already had a goal that 25% of senior management positions within the company should be held by minorities. What changed this summer, he says, is that the company established a timeline of the next five years for achieving this goal.
When it comes to fostering change, Cooperberg also believes in measurable goals and she views gender diversification efforts as a promising roadmap.
One possible model is the 30% Club Canada, which names as an aspirational goal that 30% of spots on Boards and in C-Suites be held by women by 2022. The 30% campaign was founded in the UK in 2010 by Dame Helena Morrissey, with an aim of increasing gender diversity on corporate Boards; it has grown into a global mission with chapters in 14 countries/regions.
Other advances can come as a result of better and more comprehensive disclosure. New provisions of the Canada Business Corporations Act (CBCA) went into effect on January 1, 2020, requiring publicly traded companies to provide shareholders with information on the number and percentage of members of the Board and of senior management who are women, Aboriginal persons, members of visible minorities, and people with disabilities.
“This is not an issue that’s going to go away,” Cooperberg comments. “I think that disclosure will bring all this into the light.”
Tone: Discussing Diversity and Inclusion Issues
Setting the right tone at the top can be immensely important in crafting conversations about race and other diversity and inclusion (D&I) issues.
Dax Dasilva, CEO at Montreal-based Lightspeed, notes that diversity has been part of his company’s “DNA from the start,” given that several founding members, including himself, are part of the LGBT+ community. “We believe that having many different people from different backgrounds and with seats at the table creates richer solutions,” he says. He notes that Lightspeed’s mission is to meet the challenges around the transformation of commerce, specifically, “how the consumer landscape is changing in terms of different ways people shop and dine.” Dasilva says: “Having a monoculture – or one way of thinking – doesn’t give you the richness of solutions that are possible.”
“It’s important for companies to look like the societies they serve,” says Dasilva. Among Canadian companies, he has found “a growing emphasis on making that a priority.”
Lightspeed recently sent out a survey to its employees and found that over 16% of its employees identify as gay, bisexual, queer, asexual, pansexual, or as lesbians. In addition, over 25% of employees identify as an ethnic minority and 2% identify as Black.
Now that Lightspeed is a public company, Dasilva hopes to put in place more mechanisms for increasing representation. One of these mechanisms will be a D&I section on the website for investors and other stakeholders to access.
A debate raging today is whether diversity crusades should be led by individuals outside the dominant culture.
Adjahi contends that it’s not necessary – and perhaps not even advisable – for the leader of a company’s racial equity initiative to be Black. “This is not a Black issue that Black people have to address,” she says.
Cooperberg agrees, noting, “It’s not the responsibility of Black people to lead this anymore. This is a problem and an issue that White people need to deal with.”
She continues: “We need to recognize that if we’re in a position of influence and power within a company or an organization and a community, then we have to use our voices to stand up and empower others – and help raise people of colour up.”
Cooperberg urges IROs to engage in an honest assessment of their actions to date. “This isn’t a time to pat yourself on the back,” she says. “This is really the time to say…‘What more can we do?’”
She continues: “If companies are afraid of stepping up and talking because they haven’t done enough and don’t have a good record yet, just the acknowledgement that more work needs to be done, well, that’s the message that needs to be delivered.”
What the Future Holds
Sun Life’s Bitton observes that conversations about race and diversity today feel different from earlier discussions. “Race and racial injustice issues are raised publicly and in the media all the time,” he says. “This time, the way that business leaders have reacted is very different. I don’t think leaders in the past came out with messages as strongly as they have now.”
Another difference is that diversity and inclusion goals are getting attention “because they make good business sense,” says Bitton. He continues: “I think there’s an understanding that we gain from having different opinions and viewpoints that can be brought to the table.” He also notes that the coronavirus pandemic and the recent spate of social unrest have served as memorable object lessons to all companies that they cannot operate unless their employees are healthy and safe enough to come to work.
Hall is also optimistic that the current conversations concerning anti-Black racism have a different quality than those of the past.
“All the CEOs I talk to tell me, ‘Our kids are saying, ‘This is unacceptable. This is not the world I want to live in, and you need to do something about it,’” concludes Hall. “If people like myself keep our foot on the gas and do what we need to do to move the conversation forward, this moment will not be squandered.”