Financial firms made big pledges about racial justice last year. What’s happened since?

The BlackNorth Initiative’s pledge — which requires signatories to commit to Black people holding at least 3.5% of executive and board roles based in Canada by 2025 and to hiring at least 5% of its student workforce from the Black community — now has nearly 500 signatories, including dozens from the financial industry. BlackNorth’s directors include the CEOs of CIBC, Fairfax Financial Holdings Ltd., Mackenzie Inc. and Scotiabank.

“What makes [a difference] is when institutions make a decision to address and deal with anti-Black racism: first off acknowledging that it exists, and then developing specific strategies to address it,” said Thomas Bernard, who co-sponsored a survey of 342 Black entrepreneurs that found anti-Black systemic racism creates widespread barriers to wealth creation.

“Many banks have diversity and inclusion plans. But how well are they really being integrated in all aspects of the organization? What are the targets? How are they being measured? Where’s the accountability?” she said. “We need to make sure the checks and balances are in place to ensure that industry is removing barriers.”

To help answer some of those questions, Investment Executive reached out to the 20 asset managers, banks and insurers we spoke to in 2020 to check on the status of their commitments.

Setting and meeting goals

Of the 20 firms, 11 have signed the BlackNorth pledge. Many praised the support, resources and networking the initiative provides.

“BlackNorth offers a strong peer mentoring circle,” said Brent Chamberlain, associate vice-president of inclusion and diversity with CIBC, adding that his circle meets monthly. “We can only solve anti-Black racism in partnership with other organizations.”

Two of the Big Six banks — TD and RBC — had not signed the pledge at press time.

Girish Ganesan, global head of diversity and inclusion with TD Bank Group, said the BlackNorth Initiative’s “goals, philosophy and stance align with TD very well. [But] we are answerable to our U.S. colleagues, and BlackNorth is Canada-only.” TD intends to double its representation of Black executives by the end of 2022 and increase minority executive representation across the bank by 50% by 2025.

In February, RBC CEO Dave McKay told the Toronto Star the bank had not signed the pledge because it wanted to “first focus on the commitments RBC had already made.” RBC, which did not respond to interview requests, has set a goal for 30% of its executives to be Black, Indigenous or people of colour (BIPOC), “with a focus on increasing Black and Indigenous representation.” No deadline was provided.

Raymond James Canada has signed up for the 50-30 Challenge, which asks that organizations “aspire to” 50% women and 30% underrepresented groups on Canadian boards and in senior management.

All 20 firms were invited to share examples of progress made since 2020.

Those that responded pointed to initiatives such as improved education and training, particularly around the histories of Black and Indigenous communities; donations to and partnerships with organizations supporting underrepresented communities; targeted recruitment efforts; BIPOC advisory councils and employee groups; mentorship programs for BIPOC staff; days devoted to reflection; and facilitated conversations about racism among staff.

Some banks have taken specific action to address bias in customer service, and several firms, including all Big Six banks, include diversity and inclusion criteria as a formal component of C-level executive compensation.

Quantifying progress was difficult, especially for firms that set their goals less than a year ago (see box, “Progress check-in”). While more than half of firms in our sample track diversity data, with several reporting data quarterly at the board level, most said it was too early to share progress. Goal achievement deadlines ranged from annually to 2025.

Chamberlain said CIBC is closer to meeting its goal of having 4% of board-approved executive roles held by a member of the Black community by the end of 2023. “Last year we went from 1% to 3%, and that figure includes our chief legal officer [Kikelomo Lawal],” he said.

Michelle Taylor-Jones, vice-president of global diversity, equity and inclusion with Manulife, said that 52% of new graduates hired in 2020 were BIPOC, double the goal of 25% set a year earlier.

Lessons learned

As firms implemented their diversity and inclusion strategies, they picked up lessons along the way.

Chamberlain said that CIBC has learned to be more explicit when enumerating its goals: instead of setting blanket representation targets for visible minority groups, the bank decided to be “clear and concise around the goals for underrepresented groups like members of the Black community.”

Crystal Hardie Langston, chief diversity officer with The Vanguard Group, said her firm has also taken care with language.

“A person is not diverse; a team is diverse,” she said. “We’re so quick to use ‘diverse’ to describe a woman or a person of colour, and that excludes white males who are part of diverse teams. It also ‘others’ women and people of colour. There’s a vernacular shift that we’re trying to get people to relearn.”

Langston said that framing her firm’s efforts in this way has allowed all employees to contribute to a more inclusive workplace.

“We are unapologetic about our representation goals and [the fact] that they are focused on underrepresented populations,” she said. “But our inclusion goals are for everyone.”

(Vanguard’s goals are not public, but Langston said they aim for “proportionate representation at every leadership level.”)

Regina Curry, chief diversity officer with Franklin Templeton, also spoke to issues of framing. “Overall, we are reframing [diversity and inclusion] as a business opportunity to contribute to meeting our strategic, innovation and performance objectives — not as a problem to be solved,” she said.

Franklin Templeton tracks ethnic minority data for its U.S. division, and a spokesperson said the firm is working on capturing data in Canada and elsewhere.

Leaders were cognizant, however, that some employees could be experiencing “diversity fatigue” as a result of their firms’ efforts during the past year.

“For centuries we haven’t talked about race and anti-racism, and all of a sudden it’s hitting you left, right and centre,” Ganesan said. “Had [the lessons] been bite-sized over the years, that wouldn’t be the case.”

Ganesan said that he counsels colleagues to learn about the issues facing underrepresented communities, but to focus on learning deeply about one or two areas. “If your passion lies within a certain area of diversity, double down on that,” he said. “But don’t close your mind to other issues that are going on so at least you’re aware and educated.”

Langston recommended weaving inclusion into everyday processes so that it doesn’t feel like a separate item to address.

Chamberlain agreed. “It’s about doing the work you’re already doing, but differently,” he said. “So it could be thinking harder about that hiring decision. How can you create a larger professional network that includes people who don’t look like you or share the same experiences as you? Then when you have a hiring decision in the future, you have that network to draw from.”

Real change?

Interviewees used words like “inflection point” and “sea change” to describe the racial justice reckoning of 2020. Are things really different this time around?

“The difference is our employees are going to keep us accountable. Our communities, our customers and our shareholders are going to keep us accountable,” said Manulife’s Taylor-Jones. “When you talk about embedding this work within the lifecycle of an organization, as we have done, it will take some time to see significant change and growth.”

Shareholders have used their clout to influence change. For example, following a shareholder proposal that was subsequently withdrawn, BlackRock Inc. committed to performing a racial audit of its operations in 2022. Several Canadian banks received proposals regarding board diversity targets.

And in May, TMX Group Ltd. shareholders voted 98% in favour of a shareholder proposal on Indigenous inclusion and reconciliation — a proposal TMX supported. (Read this article on what reconciliation looks like in an investment context.)

Senator Thomas Bernard said she’s encouraged by the public commitments organizations have made.

“I remain cautiously optimistic about the potential for systemic change to really take root this time. [Nonetheless], there’s a voice constantly at the back of my mind saying, ‘We have to make sure these decision-makers and policymakers are held accountable,’” she said.

“There’s a risk of performative change happening — and that’s not long-lasting. But we need long-lasting, systemic change. One of the ways we can help push for accountability is by keeping [racial justice] at the top of the agenda.”

Read our companion story on how banks are addressing anti-Black bias in customer service.