State Street has
modified its policies for portfolio companies regarding diversity disclosures, highlighting the investor’s strong focus on diversity, inclusion and human capital for 2021. Specifically, State Street is asking all portfolio companies to disclose:
- How diversity is considered within the human capital management practice and long-term strategic plans.
- Which specific diversity goals are currently being used and on what timeframe, including progress against those goals.
- Specific metrics on diversity of the global workforce and the board:
- Employee diversity by race, ethnicity and gender, broken down by industry- relevant employment categories or levels of seniority, for all full-time employees.
- In the US, companies should disclose EEO-1 data.
- Non-US companies should use SASB’s guidance and nationally appropriate frameworks.
- Gender and ethnic data for all directors.
- Company strategies for improving board diversity and the board’s level of oversight of company performance on diversity and inclusion.
State Street provided some impressions and findings from more than 70 engagements with issuers. Companies have been broadly supportive of efforts to improve diversity transparency, though some have explained that the EEO-1 report, a standardized table, does not provide an accurate picture of the population when compared to company-designed disclosures.
Of the expectations laid out in this report, State Street found the least alignment with their request for public disclosure of employee and board diversity. They also noted that companies have disclosed diversity and inclusion materials for prospective employees, but far fewer disclosures on long-term strategy or progress against goals. However, they also highlighted their optimism that the number of companies disclosing this data will rapidly increase in 2021.
The report closes by reiterating the voting policies in the
letter CEO Cyrus Taraporevala sent to companies in January along with guidance on what constitutes sufficient disclosure:
For board diversity data, either:
- Aggregate data (e.g., “5% of our Directors are Black,” “Seven of our Directors are people of color,” “30% chose not to self-identify”)
- Individual disclosures (how the director discloses their own gender or ethnicity).
- For workforce diversity data:
- The original EEO-1 report response or the “exact” content of the report in graphics.
