Inside the growing Big Law business of racial equity audits, where companies like Citi, Starbucks, and Facebook hire outsiders to investigate their impact on civil rights
Starbucks conducted a series of racial equity audits after an outcry over an incident at one of its stores.Racial equity audits started catching on after the events of 2020 prompted a racial reckoning in the U.S. Civil rights activists question whether these firms have enough independence and experience to do it right.
At the time, Holder was speaking on the phone with a leader of a large corporation who was going to hire Covington to conduct what's become a growing line of work for the firm: third-party assessments of how companies' businesses affect communities of color. Some companies are hoping to redress or avoid an embarrassing PR disaster. Others may be taking proactive measures to ensure their business doesn't violate the civil rights of certain communities, employees or customers, according to auditors.
Covington has emerged as the go-to firm when it comes to these kinds of assessments, which aim to reveal systemic issues affecting companies' policies, practices, products, and services, as well as publicly provide a plan for how to address them, according to auditors. Other auditors are asking pointed questions about whether corporate law firms have the right credentials for the job.
"I'm concerned that people are seeing this as just another revenue opportunity and not really listening to the concerns of groups who have been marginalized, discriminated against, or locked out of corporate America," she said. Covington, founded in 1919, has a history of investigating the cultures of large corporations, such as Uber and CBS.
"We published that report and thought, 'That's pretty much it. We'll never be asked to do anything like that again'," said Lewis. Covington declined to comment on how much the firm charges companies like Starbucks for work in auditing its policies and procedures around diversity and inclusion, but consulting work that aims to improve a company's governance generally costs less than investigative work that's been initiated by a public scandal.
Tejal Patel, a director at SOC Investment Group, said she expects to see similar audits at other companies in the coming weeks and months.
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