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May 25, 2021

Almost 40 percent support JPMorgan Chase racial equity audit

Proposal one of several at major financial institutions this proxy season

A shareholder proposal asking JPMorgan Chase to conduct a racial equity audit has – while not securing a majority – gained significant levels of support among investors.

The proposal, brought by the CtW Investment Group, was backed by 39.8 percent of votes cast at the company’s AGM last week. Specifically, it requests that the bank’s board ‘oversee a racial equity audit analyzing JPMorgan’s adverse impacts on non-white stakeholders and communities of color. Input from civil rights organizations, employees and customers should be considered in determining the specific matters to be analyzed. A report on the audit… should be publicly disclosed on JPMorgan’s website.’

Several other companies this proxy season have received similar proposals asking them to conduct racial equity audits or produce reports assessing their diversity, equity and inclusion (DEI) efforts. Investors are looking at corporate responses to the growing pressure for progress on DEI matters, particularly following last summer’s Black Lives Matter protests.

The CtW Investment Group and the Service Employees International Union have between them filed proposals at eight major financial institutions this proxy season.

The group says in its supporting statement for the proposal filed with JPMorgan Chase: ‘A racial equity audit would help JPMorgan identify, prioritize, remedy and avoid adverse impacts on non-white stakeholders and communities of color. We urge JPMorgan to assess its behavior through a racial equity lens in order to obtain a complete picture of how it contributes to, and could help dismantle, systemic racism.’

The bank’s board urged shareholders to vote against the proposal, writing in the company’s proxy statement: ‘The firm is committed to maintaining a culture of respect and inclusion and to advancing racial equity, and we have taken significant steps to combat systemic racism in the communities in which we are present. In developing our commitments to advance racial equity, we considered the impact of our businesses, products and services on all our stakeholders, including our employees, customers and suppliers and the communities in which we are present.’

The board adds: ‘We have developed a formal accountability process [that] considers feedback from our partners at both the national and local level and strengthens the way we incorporate [DEI] priorities and progress into year-end performance evaluations and compensation decisions. We believe our board provides effective oversight of culture and human capital management, in addition to our lending and charitable contributions practices.’

Tejal Patel, corporate governance director with CtW Investment Group, tells Corporate Secretary: ‘[W]e think the vote results show that shareholders expect an independent and verifiable assessment that [JPMorgan’s] programs related to racial equity are actually effective. [JPMorgan] has an opportunity here to demonstrate that the pledges and commitments it made in light of the racial justice protests last year were not just words.’

A request for comment from JPMorgan Chase was not returned immediately.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...