Diversity and inclusion will be the name of the game for shareholder proposals in 2021, as detailed in a recent
Agenda article highlighting several major players in the space. Center Subscribers have reported proposals from investors such as
NYC Comptroller,
CtW,
Zevin Asset Management,
Nathan Cummings and others calling for companies to take actions including “conducting and disclosing the results of a racial equity audit,” tying D&I metrics to pay, and disclosing EEO-1 reports with workforce demographics. Here are some highlights of the (often confusing) landscape as it currently stands:
Pay Equity. Arjuna Capital continues to lead the pack here, having
withdrawn a 2021 proposal at Adobe since the company agreed to provide global median gender unadjusted pay gap numbers (joining Mastercard, Starbucks, and Citigroup). Similar proposals received a surprising amount of support last year, such as Pax and NYC Comptroller’s
Oracle proposal which received 46% support.
Board Diversity. The NYC Comptroller is the leader here, with an ongoing campaign to require companies to adopt a “Rooney Rule” for directors and CEOs. This proposal received majority support at
Expeditors International last year and was filed with four companies already for 2021 with more expected. Interestingly, we do not see many proposals calling for a board diversity mandate, probably because this is already being accomplished through efforts such as Nasdaq’s proposed diversity listing requirement and California’s new laws requiring female and minority directors on boards.
EEO-1 Disclosure. Trillium, As You Sow, and the NYC Comptroller have all
submitted proposals demanding companies disclose EEO-1 workforce demographic data and the majority of S&P 100 companies have now committed to do this. We are likely to see more of these proposals in 2021.
Board Efforts on Diversity. As You Sow has submitted a
significant number of proposals this year calling on boards to publish a report on the process they follow to assess the effectiveness of company DEI programs and their “assessment of program effectiveness as reflected in any goals, metrics, and trends related to promotion, recruitment and retention.” This proposal received a surprising 37% support at a major consumer goods corporation last year.
“Racial Equity Audit.” CtW is conducting a new campaign,
starting with banks in 2021, to request that they “conduct a racial equity audit that identifies, prioritizes, and remedies the adverse impacts of the bank’s policies and practices on non-white stakeholders and communities of color.”
At the end of the day, shareholder proposals are only as influential as the level of support they receive – which could be higher in 2021 based on BlackRock’s
vow to back more resolutions on social issues this year. Large investors are facing their own criticism and scrutiny on diversity, and may feel it is hypocritical to vote against diversity-based proposals. Additionally, we could see policy initiatives that, far from mitigating investor activity, may spur it on as investors seek to be viewed as aligned with the administration’s agenda.
