Investor pressure on firms to address race and other diversity issues reaches record levels

Shareholders are pressuring companies like Amazon to prioritise diversity following Black Lives Matter

Shareholder resolutions concerning diversity at US-listed groups, including Amazon, have reached record levels in 2021, according to the Financial Times.

US-listed firms had the most diversity-focused resolutions filed this year and are facing high shareholder pressure to address race and other diversity issues, where the rise of the Black Lives Matter movement to the mainstream, and the impact of the pandemic has focused investor attention on social challenges.

Other firms facing the pressure of social-impact-minded investors include Union Pacific and JPMorgan Chase.

Heidi Soumerai, Senior Environmental, Social, and Governance Adviser at US asset manager Boston Trust Walden said the events of the past two years had been a “main impetus for investor and corporate attention on the ‘S’ in ESG, especially racial justice issues”. She added that the high levels of “for” votes at annual meetings “indicate that many large asset managers and asset owners are backing up their words in support of racial justice through their voting practices”.

Investor support for resolutions at annual meetings that focused on diversity, including “calling for companies to report on their workforce inclusion efforts”, grew exponentially this year, according to figures from data provider Proxy Insight. The data showed the average investor support for “diversity-related resolutions globally” in the first six months of 2021 was 42.4% compared with 23.9% over the whole of 2020.

A series of D&I-related resolutions received majority support from shareholders, including proposals calling for American Express and Union Pacific to “report annually on diversity efforts.”

BlackRock, BNP Paribas Asset Management, and Legal & General Investment Management (LGIM) were among the asset managers that supported at least some diversity-focused resolutions this year. Notably, LGIM supported 21 proposals put forward by shareholders focused on diversity in the US, including Amazon. At Amazon’s shareholder meeting in May, 44% of investors supported a proposal calling for a racial equity audit.

After founder Jeff Bezos, Vanguard, Amazon’s largest shareholder, voted for a diversity proposal at American Express, adding that they should disclose more about the board’s role in overseeing diversity programmes.

This year, investors were also successful in demanding that companies publish basic information about their workforces, namely statistics on race, ethnicity, and gender that companies provide to the US government but aren’t made public where the next step could be getting companies to disclose diversity information about recruitment, retention, and promotions.

Adam Kanzer, Head of Stewardship for the Americas for BNP Paribas Asset Management, said: “Events of the past year have underscored a number of critical faultlines in the US that must be repaired, and these resolutions are part of that effort. Investors are seeking to identify the corporate sector’s role in addressing various forms of discrimination.”
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