Merrill Lynch has just agreed to pay out USD 160 million to settle a long-running racial bias lawsuit in the U.S.
It's a stunning victory for the 1,200 or so current and past black employees of the company that claim they were discriminated against by the company and denied opportunities throughout their careers, and particularly poignant as it comes so close to the 50th anniversary of Martin Luther King's "I have a dream speech' (August 28, 1963).
It's also a sad reminder that discrimination and its effects are still visible today. That is disturbingly visible in modern corporations. Women account for just 16.6% of board seats on Fortune 500 companies and only 21 of those companies have a woman CEO, for example, with little more representation from minorities.
There is a fairly diverse body of evidence that suggests that more diverse corporations perform better but most of those studies fail to establish causation and, in any case, the argument should be irrelevant. We really shouldn't be demanding that women and minorities establish their equivalence with white men but rather demanding that companies address the structural inequities that discriminate against their achievement at all levels. Hopefully, Merrill Lynch's decision to settle will empower others (in the U.S. at least) to challenge outmoded patriarchal thinking.
That raises significant liability issues for companies and, potentially, ethical issues for the insurance industry. Besides the USD 160 million cost of the settlement, the drawn out suit has harmed Merrill's admittedly already shabby reputation and highlighted a white, frat boy culture that many people associate with the amped-up trading environment on Wall Street that resulted in the 2008 crash. In future, insurers will need to consider whether they will provide cover for companies looking to offset this kind of reputation risk, not to mention potential liabilities linked to discrimination or dubious business practices. How can the industry justify providing financial cover for socially destructive behavior?
Location: New York, NY