As we see more companies embark on racial equity audits and civil rights audits for their organization, we get more insight into the areas companies need to work on to be more equitable institutions for communities of color and other marginalized groups. Citi has released the results of its racial equity audit, a 2-year long process initially prompted by a shareholder proposal. Citi embarked on its racial equity audit after it made the commitment to close the racial wealth gap through its initiative Action for Racial Equity (ARE). The audit, conducted by Covington, highlighted areas where key resources are being invested into communities of color and ultimately affirms Citi’s ARE initiative as promoting equity as long as they maintain momentum and embed the practices into their business model.
“A civil rights audit is an independent, systemic examination of significant civil rights and racial equity issues that may exist in a company and provides a plan of action to address those issues in a thorough, deliberate, timely, and transparent manner. Auditors with civil rights expertise will assess a company’s business policies, practices, products, and services to determine whether and how those components have a discriminatory effect and disparate impact on people historically subject to discrimination.” – The Rationale for and Key elements of a Business Civil Rights Audit
Last year, we talked at length about the rise of civil rights audits during our DEI workshop series, and we know it’ll continue to be a hot topic among investor groups this year. The urgency for these audits has reignited as the Justice Department takes a special interest in civil rights impacts of companies. Justice recently reached an agreement with a big tech company to provide oversight of their business practices. The Justice Department found that the tech company violated the Fair Housing Act (FHA) by introducing bias in its advertising algorithm as it marketed housing to some groups and not others.
When we think of DEI work, we often tackle it through a diverse workforce and inclusive culture, but that’s just the tip of the iceberg. Companies with commitments to equity shouldn’t neglect to audit the impacts of practices that are core to their business. The ultimate DEI goal is for companies to move past the workforce numbers to audit the impact of their business practices and ensure that their business does not perpetuate discrimination in society. A civil rights audit can be a powerful tool for change in companies working to improve their business impacts on society. The Justice Department promises to hold more companies accountable for discriminatory business practices so now is the time to learn more and engage with civil rights audits.
“An audit will often examine a company’s impact on external stakeholders – including suppliers, franchises, customers, and shareholders. An audit may look at …whether the company is creating an inclusive experience for its customers. A tech company may need to consider the impact of its products and platform on consumers, including by looking at any bias in artificial intelligence.” – Ronald Machen
To learn how to get started on conducting a civil rights audit, visit our checklist on racial equity & civil rights audits – which is based on an awesome workshop we held last spring with Covington’s Eric H. Holder, Jr. and Aaron Lewis, audit pioneer Laura Murphy, Airbnb’s Megan Cacace and SOC’s Tejal Patel. Be sure to visit the replays and transcripts of this knowledge-packed session. If you’re not already a PracticalESG.com member with access to this practical and essential guidance, sign up now and take advantage of our no-risk “100-Day Promise” – During the first 100 days as an activated member, you may cancel for any reason and receive a full refund.