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Illinois Attorney General
Kwame Raoul

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Op-Ed: Attorney General Raoul: Corporate diversity initiatives are legal, ethical and good for business.

July 19, 2023

Click here to read Attorney General Raoul’s op-ed in Crain’s Chicago Business

A recent letter addressed to Fortune 100 CEOs, sent under the signature of 13 Republican state attorneys general, purported to remind corporate leaders of their obligations under federal and state law to refrain from discriminating on the basis of race. However, even a cursory reading reveals this letter to be nothing more than a thinly veiled attack that, in fact, attempts to undermine efforts to reduce racial inequities in Corporate America.

Racial inequity is, unfortunately, a problem so deeply embedded within our nation's history that it persists to this very day. As state attorneys general, my colleagues and I have a duty to protect the well-being of our residents, particularly those who routinely face inequitable treatment and discrimination. I was alarmed to see that a small faction of state attorneys general has instead taken direct aim at efforts to advance opportunities for Black people. I believe it is quite telling that 38 attorneys general — from both parties — did not sign the spurious letter in question.

The letter's suggestion that a private employer's diversity and inclusion program may constitute discrimination is, in a word, ludicrous. To be clear, the U.S. Supreme Court's decision handed down in Students for Fair Admissions Inc. v. President and Fellows of Harvard College does not directly address or govern the behavior or initiatives of private businesses. Nor does the decision, if properly read, invite the conclusion that a private company's efforts to assemble a broad and diverse applicant pool are now prohibited. These 13 attorneys general have improperly characterized companies who set legal, aspirational diversity goals as setting "quotas."

During my 14-year tenure as an Illinois state senator, I presided over a committee that sought to encourage Illinois' public pension funds to set aspirational goals to allocate assets to minority- and women-owned business enterprises in the financial services industry. These pension funds gradually boosted investments with women- and minority-owned asset managers and broker-dealers. Importantly, they did so without compromising on the performance of their investments.

Ultimately, embracing diversity is good for business and the economy. Illinois State Treasurer Michael Frerichs found that working toward aspirational diversity goals led to an increase in investment returns for the state. A focus on expanding opportunities to work with new, diverse broker dealers and asset managers has led to more than $2 billion in investment earnings from the state portfolio since Frerichs took office.

Similarly, diversity initiatives in the workplace are highly effective from a business growth perspective. Studies conducted by McKinsey and Deloitte, in 2015 and 2018, respectively, revealed that companies in the top quartile for racial, ethnic and gender diversity financially outperform the median and are more innovative and agile.

When these 13 Republican attorneys general audaciously referred solely to corporate endeavors aimed at enhancing business opportunities for African Americans as "overt . . . racial discrimination," it resonated as a furtive but validating wink to return to discriminatory practices that denied economic opportunities to African Americans. Many years of discrimination in the labor market, as well as in other areas of society, have led to a massive and persistent racial wealth gap between Black and white Americans — one that remains roughly the same today as it was two years before the Civil Rights Act was passed in 1964. Black workers still encounter structural barriers in the labor market: Studies show African American workers have higher unemployment rates than white workers, regardless of age or level of education.

I applaud the Fortune 100 for their collective efforts to address a long history of institutionalized prejudice against women and people of color. America cannot afford to dismantle the progress that has been achieved in the battle against discrimination in Corporate America. Diversity initiatives in the workplace are legal, ethically responsible, help combat disparities and continue to foster collaboration among people of different cultures, races and ethnicities.

No amount of obfuscation or intimidation can dilute the law. I stand among several other like-minded state attorneys general who will continue to fight to uphold corporate commitments to ensure access to equitable opportunities in private industry.