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Over on the Proxy Season Blog, Liz recently blogged about the voting results from the 2022 proxy season on shareholder proposals requesting independent audits of racial equity and civil rights matters, which is a topic that companies and boards of directors should be closely monitoring these days. According to a proxy season recap by Alliance Advisors, the 22 proposals that were voted on averaged 44.9% support and achieved eight majorities. ISS backed 77% of the resolutions in 2022, compared to 22% in 2021. In addition to the success with proposals included in proxy statements, the proponents were successful in negotiating with some companies to achieve the result of having the companies undertake an audit without taking the proposal to a shareholder vote.

One obvious question that a company may have when it receives this sort of shareholder proposal or a letter from a shareholder on the topic is: “who would I hire to conduct this sort of audit?” A recent WSJ article describes how a number of large law firms are promoting specialized practices that conduct audits on race and diversity. The article notes:

The market for audit work has expanded rapidly over the past few years, driven by increasing shareholder pressure. Some companies are assessing their practices on hiring, compensation and promotions. Others are evaluating whether their policies, products and services might have contributed to discrimination or are vulnerable to bias.

We will no doubt see this practices continue to grow as the shareholder proposals, letter writing campaigns and other shareholder efforts continue to put pressure on companies to conduct these audits.

– Dave Lynn