OPEN APP
Home >Companies >News >BlackRock breaks ranks with Wall Street in performing race audit

BlackRock Inc. is breaking ranks with peers on Wall Street by doing a deep dive into its business to see how it may contribute to racial inequities in the financial system.

The world’s largest money manager plans to undergo an independent racial audit of its operations, following a request from a shareholder. Companies including Airbnb Inc. and Facebook Inc. have taken similar steps in the past few years.

By contrast, Goldman Sachs Group Inc., Citigroup Inc. and Wells Fargo & Co. are asking shareholders to vote against proposals calling on them to do such audits, saying they’ve already taken measures to address racial injustice. JPMorgan Chase & Co. and Citigroup even went as far as asking regulators to block the resolutions; their appeals were denied.

Outside of finance, Johnson & Johnson also has asked its shareholders to reject a proposed racial audit of the company.

The calls for racial audits have emerged since last year’s social injustice protests in the U.S. and President Joe Biden’s recent signing of an executive order to advance equality. The audits are conducted by third-party groups, which analyze companies’ business models -- from policies to products and services -- to determine whether they cause, reinforce or perpetuate discrimination.

The investors that filed resolutions for BlackRock and other financial-services companies -- Service Employees International Union and CtW Investment Group -- said the industry has played a key role in perpetuating the racial wealth gap.

BlackRock, with $8.7 trillion of assets under management, said in a memo to employees Thursday that an external review of how its diversity, equity and inclusion policies impact stakeholders will provide useful feedback to assess its progress. The New York-based firm said it will start the audit in 2022.

SEIU said in its resolution, which has since been withdrawn, that BlackRock, as an investor, opposed most shareholder proposals in 2020 that were aimed at addressing racial-justice issues. That included two at Amazon.com Inc., which asked for disclosures about hate-promoting products and the impact of its facial-recognition technology on people of color. This year, Amazon.com has appealed to the U.S. Securities and Exchange Commission to block a racial-audit proposal.

In 2016, Airbnb became the first corporation to perform a third-party racial audit after people of color said they were discriminated against as guests. Starbucks Corp. followed with an audit by former U.S. Attorney General Eric Holder following a 2018 incident where employees at one of its locations called the police on two Black patrons who were waiting for a business meeting. Facebook also has done a racial audit.

Banks have said racial audits are unnecessary after several initiatives were introduced in the past year such as investing in Black entrepreneurs and expanding credit. CtW said the only way to effectively address racial injustice and economic inequality is to study how the industry’s products and services contribute to imbalances.

Racial audit proposals also were filed with State Street Corp. and Morgan Stanley. The companies haven’t yet responded to messages seeking comment.

Bank of America Corp. has advised shareholders to vote against a racial audit, a decision that received support from Institutional Shareholders Services. By contrast, shareholder advisory firm Glass Lewis & Co. recommended investors vote for the audit.

“Given broad societal changes, it’s particularly important for consumer-facing companies such as Bank of America, whose operations heavily rely on their customers’ trust and loyalty, to address issues of racial equity," Glass Lewis said last week.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
Edit Profile
My ReadsRedeem a Gift CardLogout