In my last post, I dusted off the Crystal Ball to look at what external signposts are telling us about the return of social risk and our future. Top of the list: the massive momentum behind the racial equity and justice movement.
For many of you, reading this post will be uncomfortable. Taking action will be terrifying. Writing this was scary, too! What if I get this wrong? What if I make things worse? I’m willing to take that risk to get this show on the oil and gas road to meaningful change. This opportunity exemplifies how we can become evolved leaders into the new energy future — and we cannot afford to miss it.
Both of these things are true:
- Today’s peak-pandemic challenges require all of our energy, wit, and capacity.
- Keeping one eye on the future requires incorporating commitments to racial equity, justice, diversity, and inclusion into your company’s strategy.
The past two weeks has been dominated by the global movement for racial justice. In the United States, leaders across society have been speaking out, proposing policies, and making commitments to participate in change. Because the oil and gas industry lacks diversity, I fear many company leaders do not feel that this movement applies to them, their employees, or their operations. Others might acknowledge they should address these issues, but don’t know where to start — concerned that any move could be the wrong one.
Those leaders are wrong. The racial equity and justice movement is now broad and deep enough to impact numerous business drivers and social risk that you care about. (Just look below at the range of leaders joining their voices to the chorus.) The movement will have profound and lasting effects including across every industry and company.
- Investment community. Public statements condemning racism were made by leaders of the biggest investment firms early on. “No organization is immune from the challenges posed by racial bias,” BlackRock CEO Larry Fink wrote and was cited along with others in an article in Barron’s at the end of May. He was joined by Jamie Dimon (CEO of JPMorgan Chase), Mark Mason (Chief Financial Officer of Citigroup), David Solomon (CEO of Goldman Sachs), and Kevin Johnson (CEO of Starbucks). (Below we will talk about why these statements are important, but insufficient.)
- Expectations of portfolio companies. Like companies everywhere, investment firms of all sizes and persuasions are talking about their own commitments to racial justice, company diversity, and their culture of inclusivity. While we haven’t seen any guidance from investors to their portfolio companies yet, my crystal ball says they are coming this year. Gavin Lewis of BlackRock has got the industry talking, and my crystal ball says, “This is Only the Beginning.” As Dave Nadig, CIO and Director of Research at ETF Trends, put it in CNBC: “They [investors and financial advisors] want to understand how to present ESG to their clients. They want to be able to have that conversation. And the honest truth here is that there’s always a catalyst. The catalyst right now is what we’re seeing in terms of the Black Lives Matter movement, and the social unrest issues.”
- Oil and gas company statements. Southern Company CEO Tom Fanning was an early leader in meaningful communications about company culture and racism. In his statement, he went beyond a condemnation of racial inequity and looked to the future, “We will not treat this as an event, but rather a long-term continuum of engagement centered on listening, talking and learning in order to achieve sustained institutional improvement.” In addition to making a statement condemning the killing of George Floyd and systemic racism, Duke Energy is pledging $1 million to nonprofit organizations committed to social justice and racial equity. Look for more of your peer organizations to follow these examples.
- Expectations interwoven with environmental and climate justice. Environmental and climate justice are going mainstream. Environmental groups are getting the message from their boards, funders, and workforces that their leadership, base of support, and work issues aren’t representative of the diverse public. As those groups address the issues that racial justice and equity activists are highlighting, that pivot will affect stakeholder pressure on your company. Environmental groups across the political spectrum have made statements both denouncing racism and pledging to improve diversity and inclusivity in their ranks. Climate is already entangled in some parts of the movement. Topics include: fair policing and environmental justice, links between racism and the environment, and black environmentalists addressing climate and anti-racism. My crystal ball says: Leading companies have teams that are fluent in the topic of environmental and climate justice.
In the last two weeks, American voters’ support for BLM has jumped dramatically, as shown in the figure below. Oil and gas leaders can be sure that their employees, customers, communities, political and civic leaders, and shareholders are participating in these conversations. Being at the table is the only leadership option.
It matters because:
Knowing the industry as I do, there’s a high likelihood that ethnic diversity and inclusivity is not your company’s strong suit. We are living at a historic turning point and successful company leaders are digging in, creating company and stakeholder dialogues, making missteps, and learning in real time.
The critical mistakes not to make:
If someone in your life has been tempted to dismiss the calls to address systemic racism, this post from 2016, Seven Ways We Know Systemic Racism is Real is an excellent primer.
The first critical mistake: Someone in your leadership is almost certainly concerned over getting into the politics of these issues, saying: “It’s not our place,” or “It’s not worth the risk.” Your real risk: sitting on the sidelines of this moment. A lack of accountability is one of the root causes of our current crisis. And we all know that leaders set the tone and expectation for accountability.
The second critical mistake: Making a (relatively) easy statement of support for the movement and leaving it at that. It didn’t take long for public commentators to start calling out anti-racist rhetoric as insufficient and calling for actionable steps from companies. I think Andre Perry, a fellow at the Brookings Institution, nailed it on ABC News: “These statements are a sign of defensiveness more so than an indication that they are proactively working to deconstruct racism in this country.” You might not be able to launch a $100 million initiative to fight racial injustice and promote diversity both inside and outside your company, like Apple is doing, but you should get to work on what you can do.
Seize the day:In an interview that predated the current protests, Paula Glover, President & CEO of The American Association of Blacks in Energy (AABE), encouraged the industry to get creative in its approach to attracting and retaining diverse talent. Her ideas resonate in the current moment: Create conversations within our companies that include diverse perspectives; acknowledge our history honestly; talk about corporate social responsibility. Some specifics to get you started:
- Realize the bar is high & resolve to exceed it. Read about racism. Talk about racism. Look in your heart. Commit to anti-racism. Get to work. I love this post, which made me squirm, and I recommend you read it, “How it’s going …” Goldman executive’s email on racial inequality in America. I also recommend Your LinkedIn Post is Not Enough. Here’s What Business Leaders Need to Do About Racism.
- Start your work on company action. Hold an all-hands meeting. Set up a leadership group. Look at your own diversity & inclusivity. Assess your anti-racism policies, culture, and training program. Gather suggestions. Then set up long-term commitments to an environment that fosters personal growth and deep culture change. If there is an organization that is finished with this work, I’ve never seen it.
- Commit to anti-racism as part of your leadership into the new energy future. This work is central to our humanity. Further, it is intrinsic to our shared future. The efforts will yield results key to our leading into the energy future: building broad stakeholder coalitions, attracting and retaining a better workforce, contributing meaningfully to community priorities. This is not extra work; it is precisely leadership work.
- Damned if you do, damned if you don’t. That’s how it feels to a lot of white people, like me, who are certain to make missteps. (Go ahead and reply to this email with your suggestions for my improvement!) That’s the small price we (white people) have to pay for living with an invisible privilege our whole lives. Let’s get over it and get to work.
- Continue the journey. Anti-racism resources here. Harvard Business Review has just put out The 10 Commitments Companies Must Make to Advance Racial Justice. Watch I Am Not Your Negro.
Your strategy team needs to be thinking about crafting a long-term diversity and inclusivity strategy now. I suggest you ensure this team is diverse and has a meaningful millennial contingent. This team needs to craft answers to questions such as:
- Do we have a system to gather information about what our employees, customers, shareholders, and stakeholders care about regarding systemic racism and inequality — and how they expect us to respond and lead?
- How will our company make meaningful commitments around diversity and inclusion?
- Can you narrate your leadership in these areas to your employees, investors, customers, and stakeholders?
These are matters of the heart, one of my energy industry colleagues told me. We are working with engineers and leaders who want to work in a linear fashion toward a solution. Instead, we need to look into our own hearts and find the personal conviction to make this the work of a career and of a lifetime.
I’m proud to have engaged with several energy industry colleagues to gather feedback for this post – you know who you are: Thank You. If this post was forwarded to you, you can subscribe here.