This blog is provided by the IPR Center for Diversity, Equity, and Inclusion
Looking back on 2020, it is possible to see that despite the enormous human suffering, we adapted, improved, and innovated in ways that eventually will lead to a healthier and more equitable future. One of the least appreciated improvements coming out of 2020 is the increased attention given to the social aspects of the environment, social, and governance (ESG) construct increasingly used by investors to measure the overall performance of companies beyond their bottom lines.
However, disability inclusion has not enjoyed the same prominence as the other “S” issues in ESG. A recent example of this oversight is NASDAQ’s proposal to adopt listing rules related to board diversity. Whereas NASDAQ’s proposal specifically mentioned gender, ethnicity, and sexual orientation as essential to board diversity, no mention was made of disability status.
As a colleague and I wrote in a comment letter to the SEC about the proposed NASDAQ rule, “It is impossible for a company to consider its board of directors truly diverse if people with disabilities are not acknowledged as able to provide expertise and insights that foster long-term value creation by companies – for investors and society alike.”
Disability inclusion is critical to achieving a holistic approach to ESG as disabilities cut across virtually every “S” issue in ESG. Eddie Ndopu, an activist, humanitarian, and one of seventeen global Advocates for the UN Sustainable Development Goals, recently said to me, “It is important to start with the sociological perspective that recognizes people experience discrimination simultaneously across many factors. Being poor and being disabled are mutually reinforcing and one can’t be addressed without the other.”
Disability Inclusion is a Business Imperative
I recently published a paper for The Harkin Institute for Public Policy & Citizen Engagement where I provided a roadmap for how to better integrate disability inclusion considerations into the ESG approaches used by investors. I believe doing so will spur greater value creation in the companies in which they invest. The mindset and approach to the paper are that disability inclusion is not charity, philanthropy, or corporate social responsibility. Rather, disability inclusion is a powerful tool to create lasting value in companies and perhaps more important, across society.
- According to the World Bank and the Global Economics Disability Report, over 1.3 billion people around the world experience some form of a disability – and they have a combined spending power of $8 trillion.
- The Center for Talent Innovation found that 75% of employees with disabilities in the United States have ideas that would drive value for their company – compared with 61% of employees without disabilities.
- Research by the World Economic Forum shows that companies that are inclusive of people with disabilities are, on average, twice as likely to have higher total shareholder returns than their peers, 28% higher revenue, and 30% higher profit margins.
Disability inclusion is not a compliance mandate or a “nice to have.” It is a business imperative. Companies that seize upon that imperative have a brand, reputation, and bottom-line advantage over their peers. They also are better able to create lasting value for society than companies that fail to embrace disability inclusion.
Diversity vs. Inclusion and the Disruption of COVID-19
Just because an organization is diverse does not necessarily mean it is inclusive. Any company that hires a significant number of minorities, women, and people with disabilities can call itself diverse. An inclusive organization is one where its culture truly values the different perspectives, ideas, and solutions that come from a diverse workforce – and integrates those into the short and long-term strategy of the company. Furthermore, an inclusive organization is one in which a diverse team is represented at every level – including the board of directors.
Not only did the concept of the workplace change due to COVID-19, what is valued in the traits of people in the workforce is forever altered. Due to the massive and sudden dislocation of how workers interact with their place of work, employees that are adaptive, flexible, self-starting, and able to effectively utilize technology to do their jobs are now the most productive – and valued – by their employers. Each of those traits is something that describes a person with disabilities already in the workforce.
The often-overused excuse that it is too hard or too expensive for places of work to be adapted to accommodate people with disabilities is no longer valid.
The Role of Investors in Disability Inclusion
The premise of my paper is that investors are best positioned to work with companies to achieve greater disability inclusion across the private sector and, ultimately, across society. Investors have both the power (roughly $40 trillion of assets are managed under ESG frameworks) and the influence (knowledge, access, and track records of successful engagements with companies on a variety of other ESG issues) that are needed to drive change. As Daniela Sirtori-Cortina of Bloomberg recently wrote, “Disability inclusion is shaping up to be the next frontier of ESG investing.”
However, for that frontier to be crossed, there must be better collaboration between investors, the private sector, and the disability community. The next installment of this series will provide recommendations to foster the improved collaboration that must occur if we are to accelerate the inclusion of people with disabilities at all levels of the workforce.
Robert (Bob) Ludke is the Founder of Ludke Consulting and a Fellow of The Harkin Institute for Public Policy and Citizen Engagement. Over his career, he has advised policymakers in the U.S. Senate and House of Representatives, taught at the United States International University in Nairobi, Kenya, and provided counsel on sustainability, social impact, and ESG strategies for companies in the retail, oil, and gas, transportation, and finance industries.