How Black innovation can achieve racial equity and drive business goals

If actions speak louder than words, then corporations, by and large, are currently not sending a great message on racial justice. Despite record commitments from Corporate America to take a more active role in confronting systemic racism after the murder of George Floyd in 2020, progress remains disappointing.

According to a McKinsey report released in December 2020 (and updated on the one-year anniversary of Floyd’s murder), more than 1,100 organizations committed $200 billion to racial justice initiatives between June and May 2021. However, almost two years later, there is a lack of clarity on how, if at all, this money is being spent and, more importantly, if anything has really changed.

Looking at this, some may say that companies don’t intend to fulfil their commitments. However, a far more likely scenario is that they just don’t know how to. In this, we believe there is an under recognized opportunity to look to social innovation, and especially to social innovators of colour, to start to operationalise racial and social justice pledges.

Leaders of colour have long been using social innovation as a framework for building collective power, dismantling entrenched racist and inequitable systems, and creating new and shared value. Laurin Leonard, and Teresa Hodge are two Black social innovators and Echoing Green Fellows who are wielding the power of social innovation to tackle a growing societal challenge.

Their organization, R3 Score, is one of the few minority-owned background check vendors in the market and works with businesses and governments to identify overlooked and untapped talent and customers by offering a holistic alternative to traditional criminal background checks. They are addressing a challenge increasingly causing economic and business strains, given the sheer number of people currently impacted by this social issue. One in three working Americans has a criminal record and this is expected to grow to one in two by 2030. It’s a situation that, as so often in a systemically unequal society, impacts Black and brown people disproportionately.

People with criminal records experience barriers to accessing work, housing, financial services, education, and many other key building blocks to economic well-being, opportunity, and mobility, largely because of the common practice of requesting criminal background checks when reviewing talent and customers.

One of Brazil's best-known social entrepreneurs, Celso Athayde – a recipient of the Schwab Foundation for Social Entrepreneurship's Social Innovator of the Year Award in 2021 – is similarly helping major corporations and governments to achieve their business goals and build a more resilient world by connecting them with consumers in the favelas and building favela entrepreneurs and businesses in the process. His company, Favela Holding (FH), which encompasses around 24 companies operating in segments ranging from market research and travel to logistics and mobile, was initially created to provide financial support to his NGO Central Única das Favelas (CUFA).

Both of these social innovators have direct experience with the problems they are trying to solve and are therefore uniquely qualified to do so. But this work cannot stay in the domain of social innovators alone.

While forward-thinking companies understand the transformative potential of social innovation and are stepping up to partner with social innovators, businesses currently tend to view social innovation through the NGO/CSR lens – the do-good side of their business – because they don’t see social enterprises as viable money-making prospects. Yet, evidence is mounting that social entrepreneurs can drive significant business growth, helping to diversify clients and create new products. To unlock these benefits at scale, we believe three key shifts are needed in the business sector.

Tapping into the power of social entrepreneurs and innovators starts with a mind shift. We have to reframe social innovation, and recognize that social innovators are not just good for society, but essential partners in the development of economies and viable vendors to major multinational corporations. While grants or capital of any kind can allow a social business to scale up, it is by creating pathways to invest in and conduct business with social innovators that we can validate double bottom line business models. By integrating social innovators into corporate supply chains, we can fundamentally start to change the types of businesses that thrive and expand wealth opportunities available to social innovators of colour as business owners.

Corporations can honour their commitments to racial and social justice by operationalizing their partnerships. As highlighted in Echoing Green’s latest report, Black Voices, Black Spaces: The Power of Black Innovation, commitment to racial justice requires solidarity with proximate Black communities. And a commitment to listening to their needs. The first big step is going beyond grants or one-time investments.

Social innovators have identified that being viewed as a business partner is important, but often there is a skills and capacity gap that requires true partnership on behalf of the corporation. Corporations can provide social innovators with the necessary relationship-building and specialised skills to compete for and win a market-making contract that signals to the market and other businesses that they are viable.

So much of success in business is relationship and network based and, especially for social innovators of colour, these networks take decades to build. By way of meaningful partnerships, corporations can create a ripple effect of change through their core business activities and ensure that impactful enterprises thrive.

The third shift required is a shift of scale. To nurture and fully activate Black innovation, we need to build a larger network of support.

Networks like Echoing Green and the Global Alliance for Social Entrepreneurship, hosted by the World Economic Forum, and platforms like the Forum itself are vital in this regard. Social innovators need an ecosystem of support to facilitate knowledge sharing, elevate their insights, and leverage platforms to build awareness and momentum. This will drive not only essential collaboration among social entrepreneurs but also multi-stakeholder collaboration that can share the benefits of social innovation even more broadly.

Through collective action and a multi-sectoral approach, we can progress further, and faster toward dismantling oppressive systems and creating a more just and caring world where all people can thrive. To ensure that the momentum of change witnessed in 2020 is sustained and brings about a necessary societal shift, there must be a change in mindset that allows for increased cross-sector collaboration, coordination, and, crucially, commitment to working with social innovators toward true racial justice.