Shareholder proponents responded last year to the Black Lives Matter movement by filing many more resolutions asking for disclosure of diversity in the workplace and in executive positions. They ended up withdrawing most of the requests that asked for a more diverse workforce, but remain interested this year in data on how companies manage programs that aim to root out racism. The number of proposals has dropped back from the 70 filed last year but is still high compared to previous years. Iniitial indications suggest that the high number of withdrawals last year will be replicated in 2022, since companies appear eager to show their commitments have teeth.

Proponents include most prominently As You Sow, the New York City and State pension funds and social investment firms.

(Proposals on gender/minority pay equity are in the Decent Work section above, p. 49. Board Diversity is in the Sustainable Governance section below (p. 74).

DATA TRANSPARENCY KEY TO IMPROVING DIVERSITY, EQUITY AND INCLUSION IN THE WORKPLACE

STEPHANIE RIVERS
Master of Public Affairs Candidate at UC Berkeley; Consultant, Whistle Stop Capital

As the great resignation rages on and businesses struggle to retain top talent, shareholders argue that more transparency about diversity and inclusion data will help companies drive need advancements in social and racial equity. Some 65 shareholder proposals this year seek information on decent work, and another four dozen ask for workforce diversity data. Companies with boards reluctant to share insights on workforce recruitment, retention, and promotion by gender, race, and ethnicity are missing an opportunity. More transparency could build trust with investors and current employees and identify gaps and needed systemic fixes.

Analysis of diversity programs: Seventeen companies (see table, p. 56) face pending proposals asking them to provide more information annually about their diversity programs and outcomes. Five are resubmissions that earned substantial support in 2021, including two majorities: Berkshire Hathaway (27.1 percent), Charter Communications (41.4 percent), Union Pacific (81.4 percent), United Parcel Service (33.7 percent) and American Express (59.7 percent).

Resolution at 12 firms seek a report “on the outcomes of the Company’s diversity, equity, and inclusion efforts” through “quantitative data on workforce composition, and recruitment, retention, and promotion rates of employees by gender, race, and ethnicity.”

Variations—At Charter Communications, it specifies the report should cover “the process that the Board follows for assessing the effectiveness of its diversity, equity and inclusion programs,” as well as its assessment of their effectiveness” with data on “goals, metrics, and trends related” for “promotion, recruitment, and retention of protected classes of employees.” Zoom Video Communications is similar: the company also should report on its “diversity, equity and inclusion policies.”

Compensation—The Electronic Arts resolution uses the Charter language noted above and adds to it a request for pay data broken down “by gender, race, ethnicity, sexual orientation, age, disability and veteran status.”

At Monster Beverage and Take-Two Interactive, NYSCRF includes an explicit reference to standards in California, saying the report should cover

recruitment, retention and promotion rates of employees by gender, race, ethnicity, sexual orientation, age, disability and veteran status. Disclosure of consolidated EEO-1 reporting as required by the Department of Labor and consolidated pay and hours-worked reporting required by the California Department of Fair Employment and Housing would provide reliable, comparable data to investors.

Withdrawals—Proponents have withdrawn at seven companies after agreements (see table, p. 56).

SEC action—NextEra Energy has challenged the proposal at the SEC, arguing the proponent did not prove stock ownership and that the resolution is moot. Another pending challenge comes from Salesforce.com, which also says there is a procedural problem, while additionally saying that the resolution duplicates a racial justice audit resolution it received first, and the proponent impermissibly filed another proposal. SEC disagreed with Pfizer’s view that its current reports make the proposal moot.

EEO-1 data reporting: The NYC Comptroller is again spearheading a big push for corporate disclosure of the annual EEO-1 forms provided to the federal Equal Employment Opportunity Commission (EEOC), although the recipients have yet to be made public. The forms classify employees by race, gender and ethnicity in 10 standard job categories and their data allow company comparisons, although some argue the EEOC categories are not sufficiently tailored to their operations. Many companies provide information about their commitments to diversity and programs for employees and they have become much more likely to disclose EEO-1 data.

Pending proposals include those at Activision Blizzard, Charter Communications (where it earned 40.7 percent last year), Kroger and ten more. The proposal asks that each “disclose on its website the annual Consolidated EEO-1 Report that it is required to submit annually to the U.S Equal Employment Opportunity Commission (EEOC).” Some specify that the disclosure should occur no more than 60 days after it is submitted to the EEOC.

Withdrawals—Boston Trust Walden reached agreement and withdrew at Dollar General and has withdrawn at SEI Investments. Nine more resolutions also have been withdrawn after agreements.

Racism: NorthStar Asset Management has resubmitted a proposal to Intel (where it received 11.3 percent last year) and PayPal (11.9 percent). It asks for an independent audit on “whether written policies or unwritten norms at Intel reinforce racism in company culture, and report to shareholders on planned remedies the Board intends to take in response.” It suggests the report could examine if “policies or unwritten norms” do either of the following:

Yield inequitable outcomes for employees based on race and ethnicity in patterns of hiring and retention, promotion, and upward mobility; disciplinary action; determining factors for allocation of “stretch assignments”; formal or informal sponsorship and mentorship; and employee usage of benefits, aggregated by company role and/or business unit;
Establish a cultural hierarchy through perceived pressure to code-switch in appearance, demeanor, word choice, or other suppressions of cultural identity.

The proposal quotes the definition of structural racism used by the National Museum of African American History and Culture and argues that ending racism would yield substantial economic benefits. (See Human Rights section, p. 61, for racial justice audit proposals.)

Pandemic and diversity impact: The AFL-CIO has a new proposal at Amazon.com that asks about the pandemic’s impact on workforce diversity. It asks the company to report on

workforce turnover rates and the effects of labor market changes that have resulted from the coronavirus disease (“COVID-19”) pandemic. The report should assess the impact of the Company’s workforce turnover on the Company’s diversity, equity and inclusion.

Amazon is arguing at the SEC that this is an ordinary business matter because it is about workforce management, but it also says the proposal duplicates another it received first seeking a racial justice audit.

Goals for diversity improvement: Trillium Asset Management wants IntercontinentalExchange to “set public company-wide, quantitative, and time-bound targets to increase the representation of minorities, particularly at the managerial and senior levels of the company.”

Executive diversity: Trillium has been working to persuade companies to make their upper echelon jobs more diverse for several years. It has withdrawn a proposal after an agreement at Ormat Technologies. It had sought a report on the company’s “assessment of the current state of its management team diversity and if and how it plans to make the company’s management team more diverse in terms of race, ethnicity, and gender.”

Further, a proponent has withdrawn a proposal asking for improved top management diversity at three companies that have yet to be named publicly.