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How the pandemic is widening racial and ethnic inequities

EOS Insight
26 May 2021 |
In the second article in our series exploring the pandemic’s broader implications for society, Sarah Swartz and Diana Glassman look at how Covid-19 has increased racial and ethnic disparities and how to address this.

Fast reading

  • Covid-19 disproportionately impacted the health and employment of racially and ethnically diverse people and widened pre-existing disparities
  • Unless companies recognise and address these disparities, they may exacerbate and perpetuate them
  • Investors should engage with companies on how they are creating safe, equitable and inclusive workplaces

The pandemic widened pre-existing racial and ethnic disparities and will continue to exacerbate those inequities unless more is done. In the first article in this series, we addressed the impact the pandemic has had on women. In this article we explore the disproportionate racial and ethnic impact of the pandemic and the role investors can play in the recovery.

Covid-19 has not impacted the health and employment of all groups equally. In the US, the Centers for Disease Control and Prevention identified an increased risk of severe illness or death from Covid-19 within racial and ethnic minority groups. These groups are also disproportionately represented in essential industries such as healthcare, retail, agriculture and manufacturing. Many of the sectors most impacted by Covid-19 such as retail, hospitality, recreation and manufacturing rely on services from front-line workers, who are usually paid a lower wage than workers in other industries. In Brazil, another country with large racial disparities, the higher mortality rate from Covid-19 among black Brazilians compared with white Brazilians is thought to be caused by socio-economic differences including poverty, housing, access to health services, educational attainment and type of employment. Additionally, the spread of Covid-19 among indigenous peoples has been linked to deforestation in the Amazon.

As pandemic recovery efforts materialise through greater vaccine coverage, re-openings, and an economic rebound, we should also consider human success measures that incorporate the rights and dignity of everyone, including future generations. Covid-19 vaccines may be necessary for safe participation in society, yet there has not been an equitable distribution. For example, within the UK, white people are more likely to have received a vaccine than other racial/ethnic groups. As employers consider vaccine requirements, someone’s employment opportunities may be limited by their ability to access the vaccine. 

We also see inequities in the job market recovery. February US employment statistics revealed that while the unemployment rate fell to 6.2% with net positive jobs added, the unemployment rate for black and Hispanic workers was much higher at 9.9% and 8.5% respectively. When gender and race are considered, black women have seen the greatest drop in employment since the pandemic began.

Embracing diversity

If the recovery from the pandemic does not equitably address all groups, we risk further increasing disparities across multiple factors including wealth, employment, education and health. In doing so, society as a whole, and businesses in particular, will miss out on the many great opportunities provided by fuller inclusion of diverse people.

There is evidence that diversity and inclusion within organisations bring many benefits, through improved decision-making, the ability to attract top talent, increased innovation and customer insight, increased employee satisfaction, and improved company image and social licence to operate.

Businesses have an opportunity to help mitigate growing inequalities by embracing diversity. Investors need to engage companies on the steps they are taking to redress the balance. This would include how they are avoiding a slower recovery for those most impacted by the pandemic including diverse racial and ethnic groups, women, younger workers, and those with lower education attainment and income, by creating equitable job opportunities, filling these roles and expanding inclusive products and services.

Our engagement

  • Safe Treatment of Workers

The safe, proper and equitable treatment of employees, contract and laid-off workers is of great importance. Companies have a responsibility and obligation to provide a safe working environment, and policies around Covid-19 testing and vaccines need to consider a disproportionate impact or burden along with safety. Sick pay provisions help to mitigate the spread of Covid-19, and for these provisions to be effective it is important that companies continue to compensate workers when they need to take time away from work to care for themselves, a household member, or another dependent.

Broader health and safety measures should consider impacts on front-line and vulnerable workers and be evaluated for their implementation and effectiveness. Additionally, workers should have the ability to raise concerns, feel comfortable doing so, and be heard by a management team that investigates and responds to these concerns. Within the sectors hit hardest by the pandemic, we believe that companies who benefited more from government stimulus have a greater responsibility to ensure that workers remain safely employed.

  • Diverse Representation at all Organisational Levels

Companies should consider racial and ethnic representation within their workforce. Companies with higher diversity among front-line workers versus more senior office-based roles need to be mindful of and work to address the disproportionate racial and ethnic safety implications that this causes. Engagement should question how a company is building a diverse and inclusive workplace at all levels from job creation and hiring to retention and promotion.

  • Inclusive Products and Services

For fuller inclusion of all people, companies should also consider and address the potential inequitable impacts of their products and services and use innovation to expand the economy for all stakeholders. For example, financial institutions should take steps to avoid race-based discriminatory lending. Mining or extraction companies should consider pollution impacts on communities of colour and obtain consent from indigenous peoples impacted by their projects. Companies in the telecommunications and technology sectors can help to close the digital divide that obstructed access to quality education during the pandemic and has the potential to perpetuate Covid’s negative impacts on diverse communities for generations.

The pandemic has shone a light on racial and ethnic inequities, and companies and investors have an opportunity and responsibility to address this for the future.

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