Corporate Transitional Justice

Posted in: Human Rights

In the last few months, Goya Beans CEO Robert Unanue’s political commentary has precipitated a boycott, a buy-cott, and now board oversight before he can speak to the press on any issue. Apparently a majority of shareholders wanted to go farther and remove the CEO entirely. Why? In 2019, he effusively praised President Trump at the announcement of the Hispanic Prosperity Initiative executive order. And as recently as January 20 of this year, Unanue said on a Fox news show “that there was a ‘war coming’ and that President Joe Biden’s election was ‘unverified.’”

One can imagine many reasons Goya might want to silence Unanue. The board may want to present an image of a non-politicized Goya. They might believe that any partisan commentary from the CEO is bad business, alienating a portion of the consumer base whereas silence usually bothers no one. Or they might be focused on the extreme partisanship of his words—thinking that broadcasting his sentiments contributes to political instability. Or they may even think that Unanue’s statements “‘endanger the lives of some of [Goya’s] shareholders.’” Or they might view censure as a matter of private conscience—that they simply cannot associate with such speech going forward. While not all companies have such politically outspoken CEOs, a perhaps surprising number are choosing to respond directly to the Capitol Hill riot and recent political instability. What, if any of this activity, might constitute private transitional justice and what else can companies committed to such aims contribute? We do not suggest that all companies necessarily share this goal, but we think it helpful to distinguish company actions that might do so from those that may be solely motivated by more mundane public relations concerns.

As our colleague Colleen Murphy writes, transitional justice is “both a legal and philosophical theory and a global practice that aims to redress wrongdoing, past and present, in order to vindicate victims, hold perpetrators to account, and transform relationships—among citizens as well as between citizens and public officials.” While normally undertaken by states, it can be precipitated, complimented, or perhaps even partially substituted for by private action. In an earlier piece, one of us discussed a narrow scope of transitional justice aimed at the recent threats to democracy as well as a broader scope aimed at redressing racial inequity that has plagued the nation since the founding. We discuss some possible mechanisms below.

One of the most visible corporate responses relates to political donations in the wake of the Capitol Hill riot. We note a wide variety of activity on this front. On the surface, at least some donations policies might reasonably be connected to accountability and transforming political behavior going forward, while others seem motivated solely by other concerns. We see a pattern in which some major corporations have paused all political contributions, while others have paused or banned contributions “to any member of Congress who voted to override the results of the U.S. presidential election,” and a third group has suspended donations to a vaguer category such as to those whose statements or activities impeded peaceful transfer of power or those who acted out of line with corporate principles. Some companies provided a specific time horizon such as Dow’s suspension of any member objecting to certification for a “period of one election cycle” or tied it to the completion of an internal process to reassess corporate donations, while others left it open. Some offered expansive public justifications, while others were only discovered through internal memos. In addition, some companies seem unlikely to have otherwise donated large amounts of money during the months following a general election. This means the impact of eliminating or suspending political contributions differs depending on whether and how much they even altered pre-existing practice. So, at best, only some of these publicized donations policy changes seem likely to address even a narrow scope of domestic transitional justice. Moreover, altering political contributions is a reactive external response, not a proactive internal initiative.

But what of those companies seeking to move beyond mere statements of support towards operationalizing the broader racial equality goals of domestic private transitional justice? Over the last year, some companies have publicized their racial justice commitment and even aligned themselves with historic movements that have advocated for the same, suggesting a growing commitment on the part of corporate America. At the same time, corporate stakeholders have exerted external pressure, demanding greater transparency for non-financial indicators—specifically environmental, social, and governance (ESG) disclosures. More and more industry reporting groups have developed ESG disclosure standards that focus on equality, human rights, diversity, and inclusion. How might the movement toward ESG indicators, standards, and disclosures inform the commitment to private transitional justice?

Given the large number of companies reassessing their donations, the corporate social responsibility and transitional justice experts might be of service by collaborating on best practices for corporate giving. ESG guidance advocates that corporations go beyond their response to recent events and develop strategies and evaluation metrics to ensure that political candidates have agendas that align with the corporation’s goals, including commitments to social justice. To that end, they might consider affirmative political donations that would align with goals of reconciliation or reallocating money earmarked for political donations to other forms of donations that enhance equality and opportunities for all forms of political participation by marginalized groups. Transitional justice demands a holistic approach, and many mechanisms are not and need not be fundamentally punitive in nature.

While altering corporate donations is one possible tool in the private transitional justice arsenal, others exist and have received less attention in the wake of the Capitol Hill riot. For instance, corporations committed to transitional justice and racial equality could bring those concerns home. Instead of simply looking at the state and its representatives as the problem, they might look internally as well. Companies committed to private transitional justice could do well to consider periodic diversity audits and implementing mechanisms for investigations and reform. This is a key component to success and part of the Board of Director’s oversight responsibilities, which include ESG. For instance, Uber’s board retained former Attorney General Eric Holder to conduct an external audit after board member, David Bonderman, resigned following sexist remarks during a meeting to improve the company’s “toxic” culture. In a now well-known 13-page report, Holder recommended, among other measures, that companies include a diversity officer as part of their senior executive team, provide employees with a voice through an employee diversity board, and implement employee implicit-bias training. The Uber board adopted Holder’s recommendations. Such efforts encompass both the backward- and forward-looking qualities necessary to transform relationships within companies.

Another mechanism for private actors interested in a broad scope of transitional justice includes an intentional and targeted commitment to diversity and inclusion initiatives. Simply vocalizing a commitment to social justice, diversity, and inclusivity is not enough. Harvard Business School professor and co-founder of FSG, a social-impact consulting firm, Mark R. Kramer, “We cannot pretend that most major corporations in America—and their shareholders—have not benefited from the structural racism, intentional inequality, and indifference to suffering that is behind the current protests.” Just as private industry has prospered while benefiting from inequality, it must now actively participate in the efforts to dismantle it moving forward. Corporations should not and cannot ignore that responsibility to address the inequities that plague corporate America.

Corporations should consider diversifying boards and leadership representation. If one views the transitional moment as fundamentally grounded in racial equity concerns, having minorities with a seat at the decision-making table matters. Boards sit at the highest level of organizational leadership and they make critical decisions, some of which directly affect transitional justice, including allocating resources, hiring and firing, and setting strategy. Boards with greater diversity are more likely to make company diversity a top priority. While board diversity often provides a different point of view, it is also likely to enhance the company’s relationship with investors and the company’s performance overall. Executive diversity is a key tool as well. Across the globe, companies with diverse executive teams are better able to recruit talented professionals, align with their customers, engage in better decision-making, and improve employee satisfaction—competencies which often speak to transformed relationships both inside and outside the companies. Some countries already require such measures. Norway paved the way in 2008, mandating public companies dedicate 40% of their director positions to women. Following their lead, over a dozen European countries implemented similar measures. In 2018, California enacted a requirement for gender diversity on public boards. In 2020, it implemented a new requirement for diversity from “underrepresented communities.” Several other states have followed California. Despite states’ efforts, the American setting is distinct. Unless existing doctrine on constitutional law is altered, it is worth noting the U.S. has significant legal limitations on these practices that often don’t exist in other places. For instance, federal and state legal challenges to the constitutional validity of California’s mandates are underway. There may be more breathing room for corporate-initiated racial diversification than that which is legally imposed. Additional internal measures include making inclusion a leadership skill on which employees at all levels are trained and evaluated and providing mentorship which can increase the number of diverse candidates promoted to leadership positions.

Another way corporations might commit themselves to private transitional justice involves the use of historical accounting and reparations. Just as many Latin American states have commissioned and published extensive reports accounting for the state’s role in grievous wrongdoing, those companies with a problematic history participating in or benefitting from slavery and the slave trade might consider doing the same. For instance, started down this path with a committee dedicated to “uncovering, documenting, and discussing Brown’s history and relationship to American slavery and the African slave trade.” It then generated an extensive, public report that detailed Brown’s troubled history and generated recommendations followed by the University including the creation of the Center for the Study of Slavery and Justice and the commission of a memorial to create a permanent reminder of this history and the role of Rhode Island in the slave trade. More recently, in the wake of a New York Times article, Georgetown University embarked on a similar path toward reparations. University leaders apologized for its role in slavery and participating in the slave trade. It then committed to create a reparations fund used to “support community projects such as health clinics and schools” and the University is considering an institute committed to “studying the structures of racism.”

For true transitional justice to take place, private companies cannot simply meet the legal minimums or offer small challenges to the worst behaviors outside the corporations but must truly commit to and implement initiatives that transform corporate culture and processes. A passive verbal commitment is not enough, instead, companies should consider intentionally building a pipeline in the company that trains, supports, and promotes employees from underrepresented groups. Companies wanting to contribute to transitional justice should be transparent about their endeavors—endeavors that can be quantified and measured. This can help the companies to ensure compliance with their internal commitments and allow them to identify and correct where they have fallen short. Companies should go beyond suspending political contributions, which targets the behavior of others, and instead affirmatively partner with social justice organizations to begin changing their own.

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