black lives matter peaceful protest

In recent months, racial discrimination has become highly visible as citizen journalists share videos of violence and brutality against Black and Indigenous communities, often at the hands of police officers.

But racial injustice extends far beyond violence and law enforcement. Nonviolent forms of racial discrimination and inequity are present in many aspects of society, including the companies in which we invest.

Racial discrimination and Canada’s diversity deficit

In November of 2019, Boston Consulting Group published a report on diversity and inclusion in corporate Canada. The report, which was based on a survey of 5,082 working Canadians at companies with over 1,000 employees, found that 34% of those who identify as people of colour experienced discrimination in the workplace. It also found that 40% of Indigenous respondents had been subjected to workplace discrimination.

In addition, Black, Indigenous and people of colour (BIPOC) are significantly underrepresented in corporate leadership positions.

As I detailed in a previous column, publicly traded companies incorporated under the Canada Business Corporations Act (CBCA) are now required to disclose the proportions of Indigenous peoples and members of visible minority groups on their boards and within senior management. Norton Rose Fulbright, a law firm, recently analyzed the diversity disclosures of 199 corporations as of early July, and the numbers are dismal. While 64.8% of issuers reported no representation of visible minorities in senior executive roles, 75.4% reported having no representation of visible minorities on their boards.

The figures are even starker for Indigenous representation, with 96.5% of issuers reporting that they do not have Indigenous representation on their board of directors and 97.5% having no such representation in senior executive positions.

Overall, Norton Rose Fulbright found that the average representation of visible minorities is 4.7% at the board level and 7.4% at the senior executive level. These numbers stand in stark contrast to the latest available data from Statistics Canada, which show that visible minorities make up 22.3% of the Canadian population while Indigenous people account for an additional 4.9%. There is clearly a large diversity deficit in corporate Canada.

Diversity is good for values and valuation

These severe racial inequities are unjust, and they paint a stark picture of how far we have to go on diversity and inclusion. Racial inequities also mean lost opportunities for companies and investors – there is intrinsic value in having a diverse and inclusive workplace.

While a business case should not be required for society to act, the investment case for diversity and inclusion happens to be quite strong. A global study from McKinsey found that companies with the most ethnically diverse executive teams are 33% more likely to outperform their peers on profitability, while companies with the most ethnically diverse boards worldwide are 43% more likely to see higher profits.

Here in Canada, a report from the Centre for International Governance Innovation, based on an analysis of 7,900 Canadian companies, found that a 1% increase in ethnocultural diversity was associated with an average 2.4% increase in revenue and a 0.5% gain in workplace productivity.

On the risk side, Starbucks lost an estimated US$16.7 million in sales due to an incident of racism in 2018 after it shut down 8,000 of its stores for anti-bias training. The company also suffered reputational damage from negative press during the incident which Apex Marketing Group pegged at nearly US$16 million.

There is clearly a strong case for diversity and inclusion from both the values and valuation-driven perspectives on responsible investment.

Market developments

The market is moving to help close the diversity deficit. In June, the newly established Canadian Council of Business Leaders Against Anti-Black Systemic Racism announced its formation and launched the BlackNorth Initiative to increase the representation of Black people in boardrooms and executive suites across Canada. As one of its first programs, BlackNorth launched a CEO Pledge for corporate leaders to make a series of commitments to advance racial diversity and inclusion within their organizations

Impact investing for racial justice is also on the rise in Canada. A coalition of Black business leaders have recently launched the Black Opportunity Fund in partnership with the Toronto Foundation. The fund will support Black-led organizations and businesses across the country. The fund’s investments will be wide-ranging, but will have a particular focus on education, health care, community support and housing.

Raven Indigenous Capital Partners, Canada’s first Indigenous-led and -owned social finance intermediary, launched the Raven Indigenous Impact Fund in 2019 to provide patient capital and technical expertise to early stage Indigenous-led enterprises. The Fund focuses on poverty reduction, community resilience and the development of an Indigenous middle class.

Funds like these will play an important role in breaking down systemic racism and advancing Black and Indigenous led businesses in Canada.

There are also opportunities to invest for racial justice in public markets. Impact Shares has developed a nonprofit exchange traded fund called the NAACP Minority Empowerment ETF. The fund tracks the Morningstar Minority Empowerment Index, providing exposure to U.S. companies with strong racial and ethnic diversity policies. As a nonprofit organization, Impact Shares donates all net advisory profits from the fund’s management fee to the National Association for the Advancement of Colored People, which provides investors with an extra layer of social impact.

As stewards of capital, investors can also engage with corporations to promote diversity and inclusion by, for example, encouraging D&I strategies and asking companies to sign BlackNorth’s CEO Pledge.


Responsible investment has deep roots in mobilizing against racism. Going way back to the mid-1700s, Quakers prohibited their members from owning slaves and petitioned the U.S. Congress to abolish slavery. More recently, in the 1970s and ’80s, international investors launched the first modern divestment campaign, diverting capital away from South African companies as a protest against their complicity in the racist apartheid regime. South African businesses lost access to global capital markets and eventually flipped, pressuring the government to end apartheid.

Now is another moment for action. Investors have an opportunity to help put a bookend on centuries of racial injustice by advancing diversity and inclusion in their portfolios. Stay tuned for more developments in the Canadian market.