Companies increasingly are providing more information about the compsition of their workforces broken down by race and gender and they routinely establish affinity groups to support different classes of employees. As investors started to look more closely at corporate diversity performance, they filed a wave of proposals asking for more specific data, and as companies began to provide it proposals fell away. This year there are close to 40 proposals about diversity, with 35 pending as of mid-February—down from 75 filings three years ago. Average support fell by half from a high of 47 percent in 2021 to 22 percent last year, partly due to more companies showing improvement on this issue, and many proposals continue to be withdrawn—showing quite a bit of common ground and acceptance of well-documented benefits to companies (and employees) from diversity programs.
Proponents have included most prominently As You Sow, the New York City and State retirement systems and various social investment firms.
(Proposals on gender/minority pay equity are above under Decent Work, p. 44. Proponents opposed to workplace diversity efforts this year are doubling down in their attacks on transgender peoples’ rights; see p. 50.)
Analysis of diversity programs: As You Sow, Amalgamated Bank and several social investment firms are continuing to ask for more information about how companies manage their diversity programs, with 14 of the 34 pending proposals to new recipients (see table, p. 51). The proposals note outside the resolved clause that the recipients either do not release their EEO-1 data to the public or (in the cases of Berkshire Hathaway, Danaher and UPS) provide what they say are “insufficient data” to assess diversity performance. Jones Lang LaSalle “has not consistently released” its EEO-1 data despite a pledge to do so in 2017. For Paramount Global (formerly Viacom) the problem also is “multiple allegations of sexism and racism.” The proposal, unchanged from 2023, seeks a report
on the effectiveness of the Company’s diversity, equity, and inclusion efforts. The report should…provide transparency on outcomes, using quantitative metrics, for hiring, retention, and promotion of employees, including data by gender, race, and ethnicity.
At Flowers Foods, Manhattan Associates and Rollins it is shorter, asking only for “a public report on the effectiveness of the Company’s diversity, equity, and inclusion efforts.”
Withdrawals—As You Sow has withdrawn after agreements at Flowers Foods and Rollins and more withdrawals are likely.
SEC action—Only one company has lodged an SEC challenge. Align Technology says the proponent failed to prove its stock ownership. Two others could be struck if a challenge emerges—proposals at Berkshire Hathaway and UPS did not earn the 25 percent they needed last year to qualify for resubmission after three years.
EEO-1: New York City Comptroller Brad Lander, on behalf of the city’s pension funds, is asking three companies to annually disclose their EEO-1 forms within 60 days after they are submitted to the EEOC, although these companies are not yet publicly disclosed. The same proposal, from Boston Trust Walden, also is pending at Valmont Industries.
Racism: NorthStar Asset Management for several years has asked companies to examine their workplaces for racism and has begun to ask about “fair chance hiring” for people who have been incarcerated. Incarceration of Black and Brown people in the United States is disproportionate to their representation in the overall population. The NAACP notes in its Fair Chance Hiring Fact Sheet that nearly half of Black American men are arrested before they are 23 years old. NorthStar’s proposal notes a California law passed in 2018 that aims to reduce undue barriers to employment for individuals with criminal records, and to consider the nature and gravity of the conviction, the time elapsed since the conviction and whether the particular crime has any bearing on the potential job.
DIVERSE WORKFORCE OUTPERFORMS ON EIGHT KEY FINANCIAL MEASURES
JAYLEN SPANN
Lead Research Associate, Whistle Stop Capital
Diversity, equity and inclusion (DEI) efforts look to ensure all employees, regardless of race or sex, get a fair shot. The recent Supreme Court decision to end affirmative action in college admissions does not affect companies’ abilities to run DEI programs – although it may impact their pipeline of incoming talent.
Companies have strong incentives to continue to strengthen their DEI programs and report on their effectiveness.
Capturing The Diversity Benefit, a report that Whistle Stop Capital published with As You Sow in November 2023, reviewed 1,641 companies’ demographic workforce data by sex, race and ethnicity from 2016 to 2021.
The proposal from NorthStar seeks reports from A.O. Smith (new), Adobe (17 percent last year), Badger Meter (17.5 percent) and IDEX (18.5 percent) that will analyze
whether [the company’s] hiring practices related to people with arrest or incarceration records are aligned with publicly stated diversity commitments, and whether those practices may pose reputational or legal risk due to potential discrimination (including racial discrimination) claims.
(Additional proposals about racial justice are covered in this report in the Human Rights section, p. 50.)
LBGTQ rights: Non-discrimination for queer people at work was a major subject for shareholder proponents until most companies started incorporating such policies in their routine human capital management policies and practices. Companies also supported key legal rulings that made same-sex marriage legal and have been important supporters of the Human Rights Campaign, which releases annual ratings of companies. With acceptance seemingly a done deal, shareholder proposals dried up. This year, however, with the backlash from right-wing groups directed at transgender people, and attacks on company policies and products, the issue is again at stake in proxy season. (Proposals from ESG critics also question health benefits, see p. 52.)
Two proposals from NYSCRF argue that company commitments to inclusiveness mean they should report on how they support queer employees. The proposal at International Paper and Lennar asks for a report “on the Company’s LGBTQ+ equity and inclusion efforts in its human capital management strategy.” The resolutions suggest the report could include “whether the company has inclusive nondiscrimination policies or guidelines, the equality and inclusiveness of employee benefits, and the availability of employee support groups,” and also if each company “collects anonymized sexual orientation and gender identity data to guide talent development, increase productivity, and prove to consumers that inclusive teams are serving them.” The proposals note that about 20 percent of Generation Z identify as LGBTQ and yet one-third “report experiencing harassment or discrimination in the five years preceding 2021 and 45.5% experienced harassment or discrimination at some point in their lives.”
Trillium Asset Management has returned to J.B. Hunt Transport Services, asking it “To address LGBTQ+ inequality in society and employment” it should “adopt and publicly disclose a policy…of equitable healthcare coverage for all employees, regardless of sexual orientation or gender identity.” A 2016 proposal also from Trillium asking the company to prohibit discrimination against LGBTQ employees earned 54.7 percent support. The company subsequently set up a task force to assess changing its policy.
SEC action—J.B. Hunt unsuccessfully challenged the 2024 proposal at the SEC, where staff disagreed the proposal is moot, ordinary business by dint of micromanagement and too vague.
Executive diversity: The Accountability Board wants Papa John’s International “to publish measurable targets for increasing diversity within Management and Senior Management and annually disclose the gender and racial diversit percentages of each Management and Senior Management level covered. This is the company’s first shareholder proposal on diversity.
DEI in code of conduct: A new proposal from the Benedictine Sisters of Mt. St. Scholastica argues the non-discrimination policy at Netflix is insufficiently detailed and points to low female representation on the board. It asks the company
to amend the publicly available Code of Ethics by expanding the topic “Inclusive & Respectful Work Environment” and to issue a report to shareholders…on how the Board of Directors of Netflix, Inc. checks and verifies board member compliance with the amended Code of Ethics (including outside of their roles as Netflix board members).
