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Excerpted From: Natè Simmons, Racial Capitalism: Complexities with Enforcing Corporate Commitments to End Racial Injustice, 55 UIC Law Review 519 (Fall, 2022) (216 Footnotes) (Full Document)


NoPhotoMaleSince May 2020, various corporations vowed to commit over $1.7 billion to racial and social justice causes in response to worldwide protests over the death of George Floyd. There is “nothing inherently problematic in encouraging racial diversity within” businesses, as this type of “diversity is a necessary prerequisite to improving racial relations in America.” The efforts of employers “to promote racial diversity should be celebrated, not disparaged.” However, concerns with “racial capitalism” are presented when corporations comprised of predominately white employees generate substantial profits based on diversity initiatives rooted in racial equality without an obligation for execution.

The term “racial capitalism” has been defined as “the process of deriving economic and social value from the racial identity of another person.” An example of racial capitalism would be a white politician with a predominately white campaign staff who recruits Blacks to place in visible positions after the release of a public opinion poll indicating the politician's lack of concern for the Black community.

In the wake of the death of George Floyd, an abundant number of companies pronounced their commitment to diversity, equity, and inclusion initiatives. However, it can be argued that it is unjust enrichment for companies to profit from campaigns geared toward Black people without fulfilling their promises to consumers. Legislators in California noticed that companies were falling short of their promises. As a result, California was the first state to seek accountability by enacting a law that regulates racial capitalism. The California law, Assembly Bill 979 (“AB 979”), found footing in its 2018 diversity legislation, Senate Bill 826 (“SB 826”), which required corporations incorporated in the state to “have at least one female director by 2019.”

This Comment brings to light the importance of the execution of initiates pronounced by corporations committing to diversity, equity, and inclusion. Part II of this Comment will first examine events that led to corporate pronouncements committing to diversity, equity, and inclusion initiatives, discuss laws governing gifts, and introduce the concept of racial capitalism. Part III will analyze racial capitalism. Part III will demonstrate issues created by racial capitalism and the complexities involved in regulating racial capitalism. Finally, Part IV of this Comment will propose a tax credit as an incentive for businesses to fulfill their promise.

[. . .]

Corporate pronouncements committing to diversity, equity, and inclusion during a public outcry for racial justice is a form of racial capitalism because companies are deriving social and economic value from their broadcasted commitment to support ending systemic racism towards Blacks. Nike's collaboration with Colin Kaepernick demonstrates just how substantial the profits are that corporations generate through racial capitalism. Notably, it is justifiable for the Black Community to expect each corporation that made a pronouncement to deliver on its promise.

It is complex to legally force corporations to fulfill their public commitments because no laws have been violated. However, a company should be encouraged to successfully execute its diversity initiatives because these initiatives are necessary to address racial disparities within corporate America. Therefore, federal legislation with a financial incentive should be enacted to influence these companies to fulfill the promises they made to their customer base, who in return, support them based on these promises.

Natè Simmons, Juris Doctor Candidate 2022, UIC School of Law.

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