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Corporations and investors must do more to combat racism

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By John StreurPresident and CEO, Calvert Research and Management

Washington - Ending racism in America is a responsibility of corporations, and corporations must recognize that their current efforts to promote their core values, and diversity and inclusion programs, fall far short of what is needed today. What good is it to live in a prosperous country when our police forces routinely kill black people?

It is time for investors to recognize this issue for what it is: a system-wide failure that our government is complicit in fostering and that violates the Constitutional rights and human rights of black people. And let us call it what it is: racism.

Let us also be clear: This is an ESG problem. Responsible Investors have come to trust environmental, social and governance (ESG) research and investment strategies to avoid investing in corporations that are lagging on taking needed action to address human rights violations and to take real action to drive needed change. As a group, we are failing to meet these needs.

Although Calvert has been a leader in dealing with inequality and pushing corporate boards to establish greater diversity, we have not done enough. As CEO of Calvert and a part of the system, I recognize that much more needs to be done. More open and forceful action is required by investors and by corporate leaders and boards.

The reality is that black people do not have the same educational and employment opportunities that white people have in America, and, therefore, do not have the same income opportunities. The cultural impact of this level of inequality holds our entire system back, economic and otherwise, and is a contributor to racism that creates the risk of civil unrest and instability.

As a first and immediate step, Calvert will call on companies to provide the information required to accurately assess their racial diversity. Although companies are not required by law or regulation to disclose publicly the racial makeup of their board and management, they generally have this information to the extent employees have self-identified, and should make this public so investors and everyone knows where they stand on diversity. Additionally, Calvert will call on companies to provide pay equity disclosure across race and gender. This is long overdue.

Companies must also speak out and make clear to local, state and federal governments that they must address police brutality against black people; companies enjoy the benefits of law enforcement and must act to assure that police forces behave responsibly. Obviously, failures are occurring and must be addressed. Companies have power and must use it to address this problem. Doing nothing adds to the problem. Companies should publicly state what they are doing to combat racism and police brutality.

Companies must also take action to address systemic failures in our education system; we all know that our system fails to provide an equal education for all and that in order for equal employment to become a reality, equal education must also be a reality.

As investors, we need to do a better job differentiating companies based on where they stand on these critical issues, and push hard for positive change. We need the information to actually see what companies are accomplishing through their diversity and inclusion efforts. We need information from companies about the outcomes they are achieving, not only the values they espouse, and it is our duty as shareholders to hold them accountable for inaction.

Bottom line: We are failing to change the system and address racism in America. Responsible Investors like Calvert, who took action to help fight the apartheid regime in South Africa decades ago, have a special role to play. I recognize that we have not done enough. Calvert will take more action to push for the changes needed to eliminate racism and police brutality in America.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.