How Companies Reckon with Past Wrongdoing

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CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.

Many of today’s blue chip brands have been around for a long time, decades, a century, even longer, and they revel in that long history. This long run, however, is often seen through rose-colored glasses because many of those histories don’t stand up so well in today’s world. I’m not talking here just about a past misstep by an ousted CEO, I’m talking here about organizational involvement in the sufferings of a past time, like insurance companies that backed slave owners, railroad companies that had a role in the Holocaust, banks that assisted military dictatorships, and the list continues with company that helped exploit indigenous peoples or natural environments around the world.

So what’s to be done about this? Is all of this just distant past that can be forgotten in the blur of history, or should companies get honest about their long record and face it? Today’s guest has some perspective on that. Sarah Federman studies the way companies talk their past and come to terms with it, both internally and outwardly. She’s an assistant professor at the University of Baltimore and the author of the HBR article, How Companies Can Address Their Historical Transgressions, Lessons From the Slave Trade and the Holocaust. Sarah, welcome to the show.

SARAH FEDERMAN: Thank you so much for having me.

CURT NICKISCH: So to start, there is always competitive pressure on leaders and companies to make the right move in today’s world. Why are past moves of yesterday’s world something they need to worry about?

SARAH FEDERMAN: Yeah, there’s a few reasons for that and I can understand that a lot of corporate executives today, it’s the last thing they want to think about. You know, survival is so difficult. They’ve come into business because they’re forward-looking and they’re visionaries in many cases, and they’re dealing with challenges all the time. So to now all of a sudden be asked to think about the past seems like an unfair burden, especially since they individually had nothing to do with that which occurred prior to their tenure at the companies.

And a lot of them come into these heritage brands excited, right? “Oh, I work for the Hudson Bay Company. I get to work for Alex Brown.” There’s a lot of pride around these brands, and there should be. I mean, to survive as a company is very difficult for any length of time. So there’s a few reasons. Some are moral arguments, then there’s more pragmatic ones, and then there’s arguments that are more about what’s the opportunity here.

There’s political moments when things open up, and right now we’re in a time of international reckoning. It’s happening all over the world, not just in the United States. And people are going to confront companies about their past. With the internet they can find out what they did, right? There’s a lot more interest in socially conscious investing, so there’s much more research available.

CURT NICKISCH: Is there a company or case that you studied that really got you thinking about this issue?

SARAH FEDERMAN: For me it was a study of the French National Railways, which is known as the SNCF. I had been living in France and just sort of stumbled into studying the country’s history, which was complicated. They were a victim of the German occupation. A number of their railway workers worked with the resistance. But the company also had a role in transporting deportees to the German border where most were taken to Auschwitz, so about 76,000 Jewish deportees were taken and about 3500 returned. So they have this legacy, this complicated history of being both a victim, a hero, and a perpetrator and were forced to kind of reconcile this perpetrator identity in the 90s. And it took about two decades, but they’ve now really done it more fully than I’ve seen any corporation do this work.

CURT NICKISCH: Do people working at companies even understand some of this history? I mean, I just wonder …

SARAH FEDERMAN: Oh gosh, no.

CURT NICKISCH: … if leaders are being blindsided by …

SARAH FEDERMAN: Oh, yeah.

CURT NICKISCH: “Oh, that’s what our logo is showing?”

SARAH FEDERMAN: Yeah. I feel … I found that. I mean, even within the French National Railways when this first came up in the 90s, well it really became public in the 90s, a survivor started speaking out. Many of the executives had no idea because they had had a post-war narrative of being heroic because the number of railway workers had participated in acts of sabotage and other ways of trying to assist people, even though it was a small percentage, but they had this heroic narrative that the whole country kind of bought into to some degree.

CURT NICKISCH: That became the story because that was the story that they told.

SARAH FEDERMAN: That’s right. After the war they actually made a movie about it, La Bataille du Rail. It’s not an untrue one, it’s just that there’s also another piece there and those are uncomfortable histories. CSX railways in the US has a history connected to slavery. So these railways do, Amtrak gets kind of a pass only because they were created in the 70s, but all the individual rails in the United States, I mean, they participated in transporting Japanese to detainment camps in World War II. So yeah, for some executives they’re just off the hook because they’re companies have changed names and so on.

But most are surprised, back to your question. I don’t think people … Most of the time you don’t have people, I think, sitting on these histories and consciously trying to bury them, although some do.

CURT NICKISCH: Yeah, I can see that the heritage can be tricky because many companies go through mergers and acquisitions and change over time. Obviously after a hundred years none of the same people are still at the company, although you may have some family ownership still. What do you make of this the man of his time argument, that this was just simply a company of its time? And they’re not responsible for that anymore.

SARAH FEDERMAN: Yeah. I really … It’s an understandable feeling and maybe legally that’s right, but I think part of the challenge is being in a retributive frame of justice versus a restorative one where it’s not about shaming and blaming, because we’re all using products that have really tainted supply chains somewhere along the line. So it’s less about the retributive side of, “You did this and now you owe,” but there’s a legacy connected to that harm. That harm has continued in these people’s lives or in these families or in these communities and needs to be addressed, and those who made the mess clean up the mess, or have a part in that work.

And so maybe that’s us as individuals and consumers we have a role, but so too do these companies that have compounded these profits. I know it’s very difficult to follow the money, but we know if we put money away for our retirement fund it hopefully grows in 50, 60 years. Can you imagine profits compounding since the 1850s? That’s a huge amount of wealth that’s been amassed in these finance companies, for example, that have connections to slavery. And that wealth was not and continues to escape much of the black community in the United States.

CURT NICKISCH: Yeah. You brought up legally, you brought up the legal argument that a company may not be legally responsible anymore. And I think a lot of attention comes to some of these cases because organizations are sued by descendants of slaves, for instance. But you’re arguing for doing more than the legal response, you are arguing that companies carry a moral burden here.

SARAH FEDERMAN: Yeah. They’ve inherited a piece of it and some want to figure out what portion of it is ours and then handling that, but there’s … It’s irreparable harm, so there’s nothing going to be done to fix it, it can’t be washed away, but there’s an opportunity now to do a piece of it. And if they do it well it actually builds their brand, shows them as partners in social equity and a lot of companies want to be that today and see themselves that way. They just have this history that they’re unfortunately carrying with them that they have to reconcile as well.

CURT NICKISCH: And probably just takes away from those efforts, I imagine. If you’re claiming to be a company that values diversity, but you have this on your historical record.

SARAH FEDERMAN: Right. And part of that is that part of these genocides or mass atrocities are massive dignity violations. Probably people have heard probably about the Armenians working so hard to have their genocide acknowledged. It means a lot to people who are descendants of these or affected by these acts that they be legitimized, that part of their suffering just be seen. So many of the … A number of the survivors I interviewed were moved by the actual apology that came with checks from Germany after the Holocaust when they did some reconciliation. It was the words of being seen that somebody cared that their parents were incinerated. So some of it these companies can do by acknowledging it.

Now, they’re in a bit of a tricky problem because when they make these statements they won’t satisfy everybody and they can’t because people have different feelings about these pasts, their reasons for apologizing will always be doubted. They’ll be saying, “Oh, they’re just apologizing because they’re trying to win us over.” So they’re in that double bind, they’re in a damned if they do, damned if they don’t position.

CURT NICKISCH: Yeah. We’re talking about apologies here, but that starts with companies recognizing and accepting, I guess, that they have some share in a past suffering.

SARAH FEDERMAN: Yeah. Transparency has to be the first step. And I encourage them to do it internally first and say, “Hey …” before people are coming to them, “What is our history? Hey, we’re older than 50 years so likely there’s something in there. What do we need to know about it? Can we hire a historian to take a look?” Because if you’re older than 50 years it’s probably there somewhere. You want to know your activities, you want to know what your company has done. And then see if your corporate materials align with that, especially for heritage brands, those that build their branding off of their long histories. And then in some cases a public statement might not need to be made, but sometimes it might be.

CURT NICKISCH: Can you give an example of a company that’s been down this road where they have hired a historian and investigated what …

SARAH FEDERMAN: Yeah. So, I mean, this is where I think the French National Railways has been a leader, even though they kind of begrudgingly had to deal with their past initially. They did, they hired a historian who spent four years slogging through their archives, they had a lot of archives, and they published the findings. Now, there wasn’t a ton in there about the Holocaust because those documents maybe were burned, but there was enough and it made them legally vulnerable. So this is why corporations don’t want to do this, they don’t want to make these reports public.

CURT NICKISCH: I’m sure their in-house counsel is saying, “Don’t do this.”

SARAH FEDERMAN: Don’t do it. Yeah. JAB Holdings is another example. They’re the family that owns Prêt à Manger, they own Einsteins. They own a lot of different companies. And it’s a family company and they also hired a … And I think it was an employee who instigated that, but then they hired a historian to come in and said that they want to be public about that history. And it’s to their credit because yeah, when the SNCF was fighting for its … When the French National Railways, also known as the SNCF, was struggling in French courts for a time, some of the findings of that independent research were used against them, so it was difficult.

And this is, of course, why companies don’t want to make these full histories public because the laws could change. If law follows public will they could be asked to pay, though the money might be the same on both sides if they have to settle with survivors or if they do public programming or if the court requires them, so it might just kind of happen no matter what. But that transparency definitely will put JAB Holdings in a good position. It shows that the SNCF, the French National Railway, is committed to that transparency and it’s modeling that for others right now.

CURT NICKISCH: You recommend first starting internally, right? Trying to figure this out for yourself. Where does a company go from there?

SARAH FEDERMAN: Yeah. I guess, of course, it depends on what you find but if there was complicity I would say … If there’s a history connected to slavery, I would think it would be a good time to mention that or work … Some companies have good examples of wording. I think BBH, Brown Brothers Harriman, has a better statement on their website about their connection to the Brown family. There’s examples that can be used on how to acknowledge that in one’s history. And then if there are affected communities to work with those communities.

CURT NICKISCH: What is the right way to accept responsibility or acknowledge responsibility?

SARAH FEDERMAN: Yeah. I know that companies are very careful about apologies because if they say, “I’m sorry,” in English that can mean, “We accept legal liability.” So they’re very careful, that’s why these statements are like, is that really an apology? Jacques Chirac gave a beautiful kind of apology for French complicity in World War II that companies tend not to replicate because they don’t want the legal liability that could come with it. But there are ways of expressing regret for the harm, which needs to be followed with engagement with those who have been harmed.

Georgetown University started this process by finding the community of owned human beings, slaves that the university sold to save itself financially, and this whole community, the descendants, still live largely together. And so there’s been some conversations back and forth about how to assist that community that was directly affected by the company. So I think that is a productive means because there’s the mea culpa statements but then there’s also, “Where is the harm and how can we contribute?”

CURT NICKISCH: Yeah, and you want to be really careful there because your goal, your intention, is a meaningful response and you don’t want it to be seen as a bid for publicity or PR either.

SARAH FEDERMAN: It will always, I suspect, to some degree be …I mean, companies I suspect will … Somebody will say it, “You’re trying to come out like the good guy, you’re just doing this now. Why did it have to take George Floyd to get you to do this?” That will be there. And so Margaret Walker wrote a book called Moral Repair and she made a statement that really resonated with … Those who represent the perpetrator will just have to accept a certain amount of ire as they do this work, which I think makes it a little bit thankless to some degree while you’ll be … Some people will appreciate greatly what you did, others will not, and this is the difficulty with irreparable harm.

CURT NICKISCH: Yeah. I mean, some of the harm is reparable, I imagine.

SARAH FEDERMAN: I mean, you can bring a river back to life perhaps, right? You can maybe return some wealth to a community, but you … There’s a number of people who’ve tried to calculate what reparations for slavery would cost and all sorts of different ways and what that would mean, and it’s trillions of dollars, it’s a number that’s even hard to comprehend. But even if one were to do that, the suffering of the people that were ripped from their families and what that meant for them and what it meant to be abused in that way and all the various ways of that, is irreparable. We can’t go back and fix that, it happened.

But the dignity violation, which Donna Hicks writes about, can be addressed to these groups of people. It did happen. It shouldn’t have happened. It’s not who we are today. And that’s what the field of transitional justice is about after mass atrocity when countries say, “That’s not who we were.” When Jacques Chirac makes that statement in France he said, “France was occupied. We did these things. We participated in this way, but that’s not who France is today.” It’s an opportunity for companies to restate, if they do this, who they are and what are their moral commitments.

CURT NICKISCH: Your point about media, I think, is also really interesting. I think it’s … The impact on people is wider than a voice or two in an article.

SARAH FEDERMAN: That’s right.

CURT NICKISCH: That’s really important to know.

SARAH FEDERMAN: Yeah, it’s really important. And I think as those of us who are not currently working in companies that have these histories to encourage to work with them rather than this kind of just shaming and blaming and attacking. Because there’s a lot of justified rage that’s circulating, looking for a target. And I understand that companies don’t want to feel that they’ve become the target of that rage. But I think the work in-house that gets creative and works with communities, maybe a small community nearby and talks about how that work can be done can make people help their own employees feel proud about where they work. And I think people want to feel good about where they work and they want … Especially if they’re at heritage brands.

CURT NICKISCH: Do you have any experience with companies that have gone through this and this whole process has turned them into a better organization?

SARAH FEDERMAN: I think for the French National Railways it has, because they only did the transparency in terms of studying their history. They made public statements, they committed to lots of commemorative work. They support the Mémorial de la Shoah, the Holocaust museum and research organization in France. They have supported plaques at places where people were deported. They’ve shown all the different ways a corporation can participate, they’ve met with survivor groups. And I think that’s really important that it’s not just one thing, it’s not just pay and then you’re off the hook, like give the money, wash your hands of it and walk away.

CURT NICKISCH: And now we can move ahead with things, right.

SARAH FEDERMAN: Yeah. There’s a lot that can be done and having companies show up to commemorative events and saying, “I didn’t do it, but my company was part of this and I want to honor that.” That’s meaningful to people.

CURT NICKISCH: Is there a current example of a company in the post George Floyd era that you can point to that you think is a good model?

SARAH FEDERMAN: That’s a really good question. There was a Fortune article about what’s happening to all that money that companies have been giving in the wake of George Floyd. And it was a really interesting article because it showed that much of that money is coming in the forms of loans and financial services that the companies can benefit from. So I was glad that they were following the trace of that. There was some concern about where is that money going. I do think these companies are starting to tweak their statements about the past. I know Aetna has done quite a bit of work. They were one of the companies that was outed in an earlier lawsuit around 2001 with other companies for offering insurance policies on slaves.

CURT NICKISCH: Right. For people who don’t know the firm, it’s a big insurance firm.

SARAH FEDERMAN: Insurance company. Yeah, it still is an insurance provider. They seem to be doing a lot of equity and inclusion work and diversity and really trying to contribute to those in the present today, it seems to be an example of that. How they deal with their past I’m not exactly sure, and that maybe may come along soon. Many of the companies we saw step up in the wake of George Floyd were like … Like Ben & Jerry’s writes this powerful statement against white supremacy, but they weren’t around during slavery. And Netflix, they weren’t around during slavery.

A lot of these statements came from companies that didn’t exist, so I was seeing less of them come from companies that actually did have a hand. They seemed to be waiting to see how this was going to go, because those lawsuits had come back, the ones that actually have those direct ties. But again, for me it’s not about the legal punishment, it’s the restorative possibility of this moment.

CURT NICKISCH: What would you tell a CEO who, I don’t know, has an inkling there may be something to learn more about but also has a lot during a pandemic on their plate and just isn’t sure that this is really necessary right now, we can always do this later.

SARAH FEDERMAN: Oh, yeah. That’s a really … That’s very understandable right now. Gosh, who can think of this right now, right?

But all of this happened to us at the same time. George Floyd happened in the middle of COVID, it’s like these moments just make so much … They bring up so much from the past and present when this happens. But what I would say, it seems to be positive when the organization takes responsibility, not just the CEO. And I think it was … Lloyd’s of London is a financial company that had the employees actually encourage the company’s movement towards looking at the past and responding to it. So a lot of this work can happen with employees, it doesn’t all have to be on the CEO. There might be a group that really wants to do this work and take ownership of it.

CURT NICKISCH: Yeah. I can imagine there are people at your company right now who know about it, may be bothered by the history, and could really get something going.

SARAH FEDERMAN: Absolutely. And those seem to work best when it comes from within and we all kind of take our piece of it. Those employees then are not responsible for these acts anymore than the executives are. But when it comes from within, it really helps also support whatever corporate ethos you want to put forward today, right?

And that actually can build a lot of spirit within an organization, too. And I know that morale is low in a lot of places, but this actually can help. People feel like that they can participate in something meaningful to them.

CURT NICKISCH: Sarah, this has been really, really intriguing and thought provoking and we really appreciate you coming on the show to talk about your work.

SARAH FEDERMAN: Thank you. I really feel like it’s a collective work, not an us-them situation.

CURT NICKISCH: That’s Sarah Federman, assistant professor at the University of Baltimore. She’s the author of the HBR article, How Companies Can Address Their Historical Transgressions Lessons From the Slave Trade and the Holocaust. If you liked this episode you might also appreciate our episode with Caitlin Rosenthal of UC Berkeley, it’s titled Why Management History Needs to Reckon with Slavery, that’s episode 656.

This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.