October 30, 2020
Board Racial Diversity Disclosure: Letter Campaign to Entire Russell 3000!
Yesterday, I blogged about a letter writing campaign focused on climate lobbying disclosure. With diversity disclosure getting a lot of attention these days, there’s now another effort focused on that too. The “Russell 3000 Board Diversity Disclosure Initiative” issued a press release saying the group is calling on Russell 3000 companies to disclose the racial/ethnic and gender composition of their boards in 2021 proxy statement filings. The initiative is being led by the State Treasurers of Illinois and Connecticut and includes investors representing over $3 trillion in assets under management. Here’s an excerpt about the initiative from the Illinois Treasurer’s website:
Many institutional investors, including the Illinois Treasurer, have advocated for gender diversity on corporate boards through proxy voting policies and through direct shareholder-company engagement. These actions, now broadly adopted by institutional investors across the world, have helped generate an increase in gender diversity on corporate boards. The lack of data on racial/ethnic composition, however, makes it difficult to apply the same tools and creates unnecessary barriers to investment analysis and academic study.
The Black Lives Matter movement and the widespread outrage sparked by the murder of George Floyd have prompted a national conversation on issues of racial equity and inclusion. Many companies have issued statements in support of racial justice, and in some cases announced responsive efforts at their operations. This initiative urges companies to harness this national movement and the momentum on gender diversity to consider publicly reporting the racial/ethnic and gender composition of the Board of Directors in their annual proxy statement for the 2021 filing.
Members of the initiative have or are examining policies to vote against nominating committees with no reported racial/ethnic diversity in their proxy statements and expanding more direct shareholder engagement. Members agree that voluntary corporate reporting in the proxy statement is the most reliable data source.
The website includes a sample letter sent to Russell 3000 companies and the letter includes a proxy statement excerpt as an example of the disclosure the group would like to see. The example shows racial/ethnic and gender information by director as additional information at the bottom of a “director skills matrix.” We’ve blogged before about potentially gathering some of this information as part of annual D&O questionnaires and it looks like more companies could be headed down that path…
Trillium Engages to “Get Out the Vote”
With the election right around the corner, a recent press release from Trillium Asset Management says it has engaged with 20 companies to understand and influence their civic engagement policies and practices. With most shareholder engagement meetings focused on governance matters, executive compensation and various social issues, civic engagement seems like a new one – then again, if there was a year for it, 2020 might be it.
Those familiar with Trillium know that the socially responsible asset manager is a frequent proponent of various social matters – it has led initiatives relating to workplace diversity, plastics, LGBT issues and others. In this most recent engagement effort, Trillium released a report back in July intended to encourage companies to provide paid time off for employees to vote. Here’s an excerpt:
Trillium is pressing the companies that can make a difference, to take this opportunity and to become part of the solution. Support for civic engagement can benefit our democracy, can increase employee satisfaction, and we believe, improve the bottom line.
We wanted to know what companies with large numbers of hourly workers are doing to support civic engagement, so we asked each of these companies: Is there a company-wide policy that provides employees with time off to vote? Who does this policy extend to? Full-time, part-time, salaried, seasonal, and hourly employees? Contractors? How much time off is provided? If time off is provided, is it paid? In states with existing time off laws does the company do more than comply with state law? What kind of education is provided to make employees aware of this benefit? We also gathered information about how companies make employees aware of these benefits and any other education they offer around civic engagement.
The report includes a “Democracy Scorecard” and praises several companies, while also noting others have room for improvement. Companies that exhibited what we believe are “best practices” on this issue have robust policies that provide employees with paid time off to vote. Many also have strong engagement programs that provide employees important information about voting locations and deadlines. Some companies provided paid time off while others deferred to adhoc conversations with managers in order to schedule time off. Companies that rely on vacation time and the structure of employee schedules are not showing a sincere commitment to employee engagement.
Some states require that employers give employees time off to vote but the laws vary. When the mid-term elections come up in a couple of years, it’ll be interesting to see if this topic makes its way into engagement meetings again. Separately from this engagement initiative, some companies have begun offering paid time off to ensure employees have time to vote – here are a few stories I saw – including Coca-Cola’s tweet in response to Sarah Silverman’s call for time off and news from Goldman Sachs and Symetra Life Insurance Company.
September-October Issue of “The Corporate Executive”
The September-October issue of The Corporate Executive was just posted – & also sent to the printer. It’s available now electronically to members of TheCorporateCounsel.net who also subscribe to the electronic newsletter (try a no-risk trial). This issue includes articles on:
– Companies Changing Incentive Compensation Plan Performance Targets or Metrics Due to Covid-19
– ISS Releases Preliminary Guidance on the Pandemic and Pay Decisions
– Perks and the Pandemic: The SEC Staff Weighs In
– Human Capital Disclosure: Are You Ready?
– Lynn Jokela