The Case for Corporate Standards to Tackle Inequality and Advance Shared Prosperity

By: Alicia Dunn, Director of Marketing & Communications at FSG and Talent Rewire

Across industries, geographies, and size, companies and business leaders are no strangers to performance standards. From legally mandated workplace safety and consumer protection standards to voluntary technical standards that guide manufacturing and product quality, standards provide the common language, metrics, and guidance needed to operationalize, measure, and evaluate performance. Standards also make good business sense — when adopted and implemented consistently they can ensure that materials, products, processes, and services work and deliver their intended results, which in turn allows companies to build trust with workers, consumers, and investors. 

Meeting the Moment

The Covid-19 pandemic and heightened awareness of racial injustice highlighted the results of centuries of economic inequality and systemic racism in the United States. In the US, there are nearly 100 million people — over 40 percent of people of color and nearly 25 percent of white people — living in economic insecurity who face financial vulnerabilities and are locked out of pursuing economic mobility as a result of rotating from one low-paying job to the next

At the same time, perspectives on the role companies can and should play in addressing social challenges are evolving; notably, in 2019 the Business Roundtable updated its Statement on the Purpose of a Corporation to reflect the belief that companies should create value for all stakeholders, not simply shareholders. Poll after poll show that Americans believe companies should take stands on critical social issues like racism and agree that CEOs have a role to play in addressing inequality and advancing shared prosperity.

From May 2020 to October 2022, over 1,300 Fortune 1000 companies pledged $340B to tackle racial injustice. To tackle inequality and meet the expectations of workers, customers, and long-term shareholders alike, translating those commitments into lasting change is the opportunity ahead for companies.

What we often hear from business leaders is that they want and need more guidance on how to advance equity effectively. They ask the question: “What does ‘good’ look like?”  Through our development of corporate standards, we are filling a gap in the current standards landscape and providing corporate leaders a roadmap to ignite and sustain strong and healthy workplaces, tackling inequalities, expanding market reach, and increasing business resilience.

The Potential for Standards to Create Value

Operationalizing and making progress on the extensive racial equity commitments we have seen within the private sector can unlock greater value for the nearly 100 million people living in economic insecurity who are at the heart of our work — and for companies who must be positioned to appeal to them. Indeed, there is ample data to support our position that companies will benefit by tackling inequality and advancing shared prosperity — those benefits include attracting and retaining top talent, increasing productivity, decreasing costly turnover, unlocking new market opportunities, and building greater organizational resilience and long-term sustainability. 

Take, for example, creating and providing quality jobs for employees at all levels

A 2022 survey of over 1,300 C-Suite executives identified failure to attract and retain talent as the biggest organizational risk in 2023 and in the decade to come. Fundamental to attracting, retaining, and advancing talent is offering quality jobs which are built on principles of economic stability; economic mobility; and equity, respect, and voice.  Our standard on job quality, to be released this spring, will lay out clear goals, milestones and guidance to address fair pay and pay equity, fair benefits, and worker voice.

Offering quality jobs is consistent with worker expectations and may increase engagement and productivity, decrease absenteeism and turnover, increase revenue, and contribute to a company’s social license to operate. Providing quality jobs also contributes to our economic stability and the well-being of communities by promoting wealth generation and economic mobility. 

Expectations for businesses to play a more active role in tackling inequality and advancing equity will continue to grow. At the same time, companies must navigate an increasingly complex social and political landscape. The reality is that the US is becoming a more racially and ethnically diverse society and in order for companies to remain competitive and relevant, they will need to evolve to deliver greater value for all stakeholders, not just shareholders. Our corporate performance standards lay out a framework that provides clear pathways for companies to meet the moment today and to confidently build strategies that result in a more equitable workplace and society for years to come.

Save the Date

On May 20, 2024, we will release the draft standards and launch our third public comment period. Sign up for our newsletter to be the first to see the draft standards when they are released and to learn how you can lend your voice to this critical work. 

We are working across sectors — with sustainability experts, investors, workers, business leaders, equity advocates, business affinity groups, public sector leaders, and more — to help ensure our collective efforts meaningfully benefit the nearly 100 million economically insecure people in the US. Join us in supporting business leaders to play a productive, long-term role in tackling inequality and advancing shared prosperity for all.