Financial marketplace pressed to be more inclusive
George Curry | 3/3/2014, 9:21 a.m.
NEW YORK (NNPA) – After people of color were excluded last year from the two largest bond issuance deals in history – Verizon Communications, which sold $49 billion of debt, and Apple Inc., which sold $17 billion of debt – the Rainbow PUSH Wall Street Project is stepping up efforts to expand opportunity for African Americans, women and other disadvantaged groups.
“For many in the minority investment arena, a feeling of frustration exists because for almost two decades there has only been gradual progress in opening capital markets to more comprehensive diversity practices,” says a report issued last week by the organization led by civil rights leader Jesse L. Jackson Sr. “Many firms face constant challenges (undercapitalization, limited access to corporate decision-makers, arbitrary caps on utilization) and this one presented by the limited access to debt capital markets opportunities, only adds to the list.”
The report, titled, Minority Inclusion in Debt Capital Markets: A Ranking of Corporate Issuers, is part of an effort to compel large corporations to improve their record.
Released at the annual convention of the Wall Street Project in New York, the report analyzes 70 percent of the debt deals over a 45-month period. It divides firms into five tiers, with Tier 1 having the best record of using minority- and women-owned firms in debt deals. Only four companies were ranked in the top tier: Citicorp, General Electric Company, JP Morgan and Toyota Motor Credit Corp.
In Tier 2 were 17 companies: AIG, Ally, AT&T, Bank of America, Bank of New York, Credit Suisse, Deutsche Bank, Ford, General Motors, Goldman Sachs, IBM, MetLife, Pepsico, Southern Company, Verizon Communications Inc., Wal-Mart and Wells Fargo & Company.
Forty-eight companies were listed in Tier 3, including Altria, Boeing, Capital One, Caterpillar, CBS, Federal Express, General Mills, Home Depot, Kellogg, Kraft, Kroger, McDonalds, Pfizer, Starbucks, Walt Disney, Time Warner and Viacom.
Tier 4 consisted of 37 companies, including Campbell Soup, CVS, Johnson & Johnson, Marriott International, Procter & Gamble and Allstate.
At the bottom, in Tier 5, with the worst record of diversity were 55 companies, including Aetna, Apple, AutoZone, Bristol Myers Squibb, Costco, Cox Communications, Exxon, Halliburton, Hertz, Hewlett Packard, HJ Heinz Co., John Deere, KeyCorp, Liberty Mutual, Lockheed Martin, NewsCorp, Nike, Nissan Motor Acceptance Corp., Oracle, Safeway, Tennessee Valley Authority, Coca-Cola Co., Waste Management Inc. and Wellpoint.
As part of the effort to increase diversity, companies need to revisit policies that restrict minority allocations to 1 to 2 percent, maintain fixed rotations of select minority firms on deals or excluded minority firms altogether.
There were some industry variations, according to the report. Because of the nature of their services, for example, financial firms have more debt deals than other sectors; roughly half of deals and communications and the utility sectors were concentrated in Tier 3 and more than 80 percent of energy companies were in Tier 5.
According to the report, there is a correlation between diverse corporate boards and successful diversity efforts.
“Seven companies in this analysis were on Black Enterprise’s list of 75 companies without Black Board Members (Sept. 2013),” the report stated. “Not surprisingly, they were ranked in the lowest two tiers.”
Of the companies ranked in Tier 4 and Tier 5, neither CVS, Duke Energy, Ebay, Google, Apple, Hewlett Packard nor NewsCorp had a Black board member.
“This ranking of corporations casts a direct spotlight on those corporations that are best positioned today, to offer minority firms more economic parity,” the report concluded. “With this foundation of information, the Wall Street Project is positioned to challenge current corporate conventions and seeks to ultimately challenge the status quo.
“The goal is to ensure that future Apple and Verizon debt deals will include a broader array of firms, who can equally participate in the economic rewards, manage their firms for long-term sustainability and ultimately, have a positive impact on the economic vitality of our country.”