OPINION | We can't say black lives matter without holding corporations accountable
FIN24 / 28 JUNE 2020 - 14.55 / AJAY LALU
We must move beyond sporadic protests and towards long-term accountability.
Change starts at the top, and South Africa has progressive legislation on transformation.
B-BBEE must be implemented rigorously and within a defined time frame.
Corporations have a key role to play, but buy-in remains a challenge.
If we are to stop violence against black people, not only in the USA but around the world, then we need to go beyond sporadic protests and find a way to hold companies and governments responsible for economic inclusion and diversity. The current waves of global protests are sure to die down and then what? Do we wait till the next George Floyd killing before we look at longer term solutions?
The only way that we can really create an equalised society is to facilitate the economic emancipation of our enslaved forefathers and mothers. The change we seek, as blacks, needs to undo centuries of inherent enslavement of black people through colonisation and structured and deliberate oppression.
The civil rights movement in the USA supported the Anti-Apartheid movement in South Africa and we as South Africans have an obligation to support our black brothers and sisters in the USA and elsewhere in the world. However, this support can and must go beyond protests and marches. I believe that the only real way that we can change the lives of black people around the world is to ensure that we measure and hold corporations and governments and our leaders accountable for racial and gender inclusiveness. South Africa can lend its history and our response to racial inequality to the rest of the world.
South Africa has a law called the Broad-Based Black Economic Empowerment (BBBEE) Act that ensures companies wanting to do business with the State must have an independently verified B-BBEE scorecard. This scorecard is objectively measured on five elements: Ownership, Management Control, Skills Development, Enterprise and Supplier Development and Socio-Economic Development.
Through this legislation we have seen a rise in black representation from the boardrooms to the classrooms. I believe that we can export some aspects of this legislation to the world at large.
Management Control looks at affirmative action to ensure a diverse and representative workforce at all occupational levels from executive directors to junior management. The tech industry has recently been plagued by diversity challenges. Even when you look at the responses by major corporations it shows a lack of appreciation of how serious the BLM issue has become.
Change starts at the top and unless we have diverse and representative boards this change and accountability cannot be driven throughout organisations. We need to ensure that clear and achievable targets are set for all occupational levels in terms of representation of black people and black women. This ensures advancement and development opportunities for black people. We should get corporations to report annually on diversity in the workplace as part of their annual financial statements and stakeholder reports. In South Africa the Department of Labour receives all company reports and produces a national report on employment equity by sector and geographical area.
The role of corporations
The advancement of black people in the workplace needs to recognise that years of systemic and institutionalised racism can only be overcome through upskilling and providing work opportunities to black youth. This will allow them to escape poverty.
This requires companies to spend a percentage of their total payroll on the development of skills of black employees and provide bursaries to black students. These bursaries should include community collages as well as scholarships and support to attend Ivy League institutions. All medium and large companies should also have a quota of learnerships for black youth to gain experience in the workplace.
In South Africa we have a quota of 5% of your employee headcount as a target for the number of black learners. Upon completion of a learnership contract, bonus points are awarded for offering learners a permanent contract of employment. This ensures that black youth are absorbed into the workforce once upskilled.
One of the most empowering elements of the B-BBEE scorecard is Enterprise and Supplier Development. This element supports the inclusion of minority or black-owned and black women-owned businesses in the supply chains of larger companies.
It requires certain targets to be set as a percentage of a company’s total procurement for minority owned businesses including women and disabled owned small businesses. One of the things that the Covid-19 pandemic has taught us is that local supply chains are part of diversifying global supply chain risk.
In South Africa, B-BBEE requires companies to spend 3% of their Net Profit After Tax on supporting black owned and black women owned businesses. These businesses need to be more than 51% black-owned to qualify. We have seen investments of billions of dollars in supply chains to black-owned companies. There are also a number of risks here for companies to front as black owned so a word of caution here.
Lastly, we have Socio-Economic Development or corporate social responsibility. BBBEE requires companies to spend 1% of Net Profit After Tax on programmes that support black beneficiaries. In the context of BLM, this could include minority neighbourhoods and also support to families of victims of violence and racism.
In order to adopt such programmes it will require broad support and buy-in, especially from government and large corporations. We will need to clearly define minority owned and Black and Latino beneficiaries. The transformation of various sectors, including the Financial Sector, is key to successful implementation of the programme.
The asset management industry can use the allocation of capital to force change. It is in their best interest, after all, that asset values continue to rise and lowering the risk of social instability ensures this.
Another key lesson is that we need to define an end state of the programme, since it can create a culture of dependency on such programmes.
As a leading practitioner in BBBEE, I believe that South Africa can share its experiences with minority communities around the world and lead to a world with less racism and organisations with reduced institutionalised racism.
Ajay Lalu is Managing Director of Black Lite Consulting. Views expressed are the author's own.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER