Many Investors Seek Proof Corporate Diversity Programs Are Effective

Many companies have released statements supporting diversity and equity and some have put strong programs in place.
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Photo: SHRM

BERKELEY, CA—MAY 25, 2021—Over the last two weeks, investors have shown dramatic support for shareholder resolutions asking that companies report on the effectiveness of their diversity, equity, and inclusion (DEI) programs.

Many companies have released statements supporting diversity and equity and some have put strong programs in place. Shareholders are seeking reporting on the effectiveness of these programs in order to identify best practices and leading companies. Boards must ensure oversight of program effectiveness not only in hiring, but retaining, and promoting diverse employees.

Andrew Behar, CEO of As You Sow, an organization that represents shareholders on material issues such as diversity, said:

“Investors see diversity, equity, and inclusion as a material issue because it’s directly linked to corporate performance. Our DEI scorecard has 31 key performance indicators about disclosure. It’s long overdue that we have corporate transparency so we can get to work on the next phase of this journey, defining best practices and measuring outcomes. We all know that inclusive workplaces attract and retain the best and brightest employees, have a better understanding of their markets, a wider mix of leadership skills, and other qualities that help drive success.”

The depth of shareholder support for these proposals sends a clear message — DEI resolutions at American Express earned 60% support; Berkshire Hathaway, 54% of independent shareholder support (27% if Warren Buffet and board shares are included); Charter Communications, 41%; International Business Machines, 94%; and Union Pacific, 81%.

According to the As You Sow DEI Disclosure Scorecard, 70% of S&P 500 companies have published statements about their commitment to a diverse workplace. Many have supported these statements with the release of concrete data about their employees, including the diversity of their workforce and their recruitment, retention, and promotion rates.

Some companies, however, despite strong statements about the importance of diversity, have declined to provide meaningful data to assure investors that their workplaces are diverse and inclusive. A company that makes statements in support of racial justice, but is not able to show that its actions are aligned with stated values, is at risk of being accused of “woke-washing,” a term defined by as “using social justice as a marketing strategy.”

Meredith Benton, principal of the consultancy Whistle Stop Capital and workplace equity program manager for As You Sow added:

“Investors are no longer willing to accept feel-good stories about diversity and inclusion programs. Just as investors don’t accept vague promises about revenue or operating expenses, they don’t want vague promises about DEI results, either. They want hard numbers.”

Investors have filed similar resolutions at Caterpillar and Nike, whose votes are still upcoming. While Caterpillar has placed the resolution on its ballot and also increased its diversity reporting, Nike is attempting to block the issue from a vote of its shareholders using legal tactics.

To learn more about As You Sow and Whistle Stop Capital’s work on workplace equity, click here.

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