We caught up with Lata Reddy, senior vice president of inclusive solutions at Prudential Financial and chair of the Prudential Foundation, to talk about how one of the oldest and largest US companies is facing structural racism head on, and what lessons can be learned from corporate leadership during turbulent times.
Supported by Prudential. Prudential is an underwriter of Aspen Ideas Now.
Prudential has deep roots in your headquarters city of Newark, NJ. What investments have you made in Newark that you feel have led to economic and social systemic change?
Prudential was founded 145 years ago in Newark, NJ, one of the country’s oldest and most diverse cities. After civil unrest in 1967, we chose to stay in Newark when other companies fled. We saw first-hand the impact of systemic racism and knew we wanted to be part of solutions that drive change.
Over the past decade alone, Prudential has invested over $1 billion in Newark’s resiliency and success, collaborating with cross-sector leadership to drive inclusive growth. This has included:
Building pathways for local talent: We helped create the Newark Anchor Collaborative, a commitment to local hiring to create much-needed entry points to living wage employment for dislocated workers, Opportunity Youth, and the long-term unemployed. We also invested $25 million to support an array of fast-growing businesses hiring in Newark, like AeroFarms and Ironbound Studios.
Investing in housing: Having a safe, healthy, affordable home is a foundation for stability and dignity and an economic engine for cities. Over the years Prudential has preserved more than 1,000 affordable housing units and developed 1,200-plus new residential units in neighborhoods across Newark.
Supporting public education: A high-quality education is critical to moving up the economic ladder. We created an organization that unites parents, district and charter educators, companies, and local government to improve the quality of public schools. According to a new national ranking, Newark now leads the nation in the number of “beat the odds” public schools, or schools where students are substantially out-performing statistical predictions based on race and income, for Black, Latino, and/or low-income students.
What concrete actions is Prudential taking to support its employees of color?
In March 2019, within months of becoming Prudential’s CEO, Charlie Lowrey announced four major initiatives to set our company’s focus. Becoming a fully inclusive company was on that short list. Even before that, in 2018, we began tying the long-term compensation of our most senior executives to diverse representation goals. We also created an Inclusion Council, comprised of our CEO, C-suite leaders and our Business Resource Groups, that meets quarterly to create actionable steps to make Prudential more inclusive.
But we knew there was more work to be done. That's why this summer, following the death of George Floyd, we conducted nearly 125 listening forums on racial equity with 7,000 employees to understand how we can foster an inclusive workplace and continue to contribute to meaningful, enduring progress in society and within our company. The ideas shared were then used to create nine commitments to racial equity around talent, data transparency, product development, advocacy and resource allocation.
For example, our Human Resources team is using data analyses to identify potential opportunities in our talent practices such as promotions and talent mobility so we can address them, implement improvements and monitor them over time. Inviting employees and third parties to challenge assumptions and offer new solutions is woven throughout the process.
Prudential is also investing in the professional development of all US employees with a portfolio of training programs focused on core issues like how to be antiracist, understanding racism and everyday bias, and building cultural intelligence.
As we aim to make progress towards equity, how will Prudential remove structural barriers to Black economic empowerment, and support communities of color more broadly?
Black Americans wield $1.3 trillion in purchasing power, but represent a severely underserved market, especially in the financial services sector. It’s no secret that systemic exclusion from critical wealth building moments, have led to the staggering racial wealth gap that exists today, now exacerbated by COVID-19.
Prudential’s Financial Wellness Census in 2019 found that pre-COVID, Black Americans were living in households with substantially lower total incomes than the general population. Once COVID-19 hit, we re-fielded the Census and found that, while median household income for the general population was $75k, it fell to $45k from $55k for Black Americans.
As a company founded on the principle of equity and headquartered in Newark – a city where the majority of residents are Black and Brown - Prudential has long invested in communities of color. Our $40 million in annual grants, in addition to our $1 billion impact investing portfolio, are focused on equity issues like education, affordable housing, financial inclusion and criminal justice reform. Most recently, we invested $7.7 million in grants focused directly on racial equity and justice. To accelerate our long-standing commitment, this month we are piloting a new business strategy to help more Black Americans reach financial security, with a specific focus on Detroit, Atlanta, and Newark. Not only will this expand Prudential’s addressable market and carry forward our founding principles, it will empower communities of color by equipping them with the tools to reach financial wellness.
Everything seems to be at an inflection point. As we look ahead to what a ‘new normal’ might look like, what is the role of the private sector in making sure that our economic and societal recovery is centered on racial equity?
COVID-19 has certainly tested our nation’s resilience and, as I noted, is disproportionately impacting communities that already faced entrenched barriers to opportunity. Coupled with the most recent incidents of police brutality, the events of this year have laid bare the structural inequities and racism that have persisted in our country for decades.
As we look to the new normal, the first step in creating systemic solutions is to deeply examine how the institution you represent contributed to today’s injustices. At Prudential, for example, examining our past revealed historical business practices that we are not proud of, including those that negatively impacted Black Americans and other under-served communities. We know that while this is a part of our story, it does not have to be our legacy and by knowing that history, we will be able to think differently about what we need to do to drive progress further and faster.
As we move forward with building pathways for Black Americans with even greater urgency, the private sector will be critical in creating quality careers with growth and development opportunities, and robust employee benefits.
As product developers and manufacturers—wielding significant purchasing power and investment capital—companies also have the ability to use these levers to create systemic change. At Prudential we have invested in product innovations to increase emergency savings for the financially fragile and are using our advocacy platform to advance systemic policy change, such as national paid family leave and retirement programs that work for small businesses, which employ larger numbers of people of color.
But we recognize that creating meaningful change cannot be up to one business or sector alone. In our current reality, we must collaborate and learn from the experiences of each other if we are to build a more just world.
Lata Reddy is senior vice president of inclusive solutions at Prudential Financial and chair of the Prudential Foundation.