To combat systemic racism, corporations should recognize and remedy industry- and company-specific barriers to everyone’s full inclusion in societal and economic participation. Racial gaps cost the U.S. economy an estimated $16 trillion over the past twenty years. Closing the Black- and Hispanic-white wealth gaps could add 4-6% to American GDP by 2028.

One year after many companies made commitments to racial justice, the practical outcomes remain unclear. Fifty corporate pledges totaling $49.5 billion were characterized by a 2021 analysis as falling short of addressing systemic racism. Shareholders lack independent assessments that racial equity strategies are impactful, address appropriate topics, and unlock growth.

Addressing racism and its economic costs demands more than reliance on internal action and assessment. Audits engage companies in a process that internal actions may not replicate, unlocking value and uncovering blind spots that companies may have to their policies and practices. Company leaders are not diversity, equity, and inclusion experts and lack objectivity. Crucially, a racial justice audit examines the external impact a company has on minority communities.

Given companies across sectors are embroiled in race-related controversies, any company without a third-party audit and plan for improvement of internal and external racial impacts could be at risk. Companies like Facebook, Starbucks, and Blackrock have committed to such audits, and guidelines have been developed by practitioners.

Despite national reforms, auto and homeowners’ insurance policies are still differently applied to minority policyholders. An investigation found insurance companies charged higher premiums by up to 30 percent in minority communities versus whiter communities despite similar accident costs. In 2018, Travelers settled a National Fair Housing Alliance lawsuit alleging that Travelers denied insurance to landlords renting to Section 8 voucher recipients, who are predominantly Black women. In 2020, Travelers generated 34.2 percent of revenue from personal home and auto insurance. Shareholders are concerned there may be gaps between the company’s non-discriminatory business practice policy and actual outcomes, and that a racial justice audit covering both vendor relationships and insurance products may help the company identify and close potential gaps. Additionally, Travelers provides law enforcement liability insurance. In this pivotal role, the company may be at risk for contributing to systemic racism, but also may provide solutions.