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Jun 06, 2019

Shareholders back diversity report proposals

Two measures brought by Trillium Asset Management pass votes

Shareholders have in the past few weeks given their support to at least two proposals seeking to boost disclosure about diversity.

According to a regulatory filing by The Travelers Companies on its May 22 AGM, roughly 51 percent of votes supported a proposal by Trillium Asset Management requesting that the company prepare a report for investors including:

  • A chart identifying employees according to gender and race in major Equal Employment Opportunity Commission (EEOC)-defined job categories, listing numbers or percentages in each category
  • A description of policies/programs focused on increasing gender and racial diversity in the workplace.

‘A report adequate for investors to assess strategy and performance can include a review of appropriate time-bound benchmarks for judging current and future progress, and details of policies and practices designed to reduce unconscious bias in hiring and to build mentorship,’ the asset manager says in a supporting statement.

Diversity has been on the agendas of some investors and companies for a long time. For example, Trillium filed a workplace diversity proposal at Home Depot in 1999. But shareholder backing for proposals such as the one at Travelers comes amid an uptick in investor interest in – and hence board and governance team attention to – human capital issues such as diversity, inclusion, talent development, succession planning and workplace culture and misconduct.

Trillium had brought the same diversity report proposal at the two previous Travelers AGMs, where it had secured 36 percent of the vote each time. ‘We are very pleased that investors realize this is an important issue,’ Brianna Murphy, vice president and member of Trillium’s shareholder advocacy team, tells Corporate Secretary. ‘The vote shows that the company needs to [provide] more transparency.’ She adds that the company should release more specific data about diversity.

Murphy notes that other insurance companies and financial services firms more broadly are providing the type of diversity report Trillium is seeking from Travelers.

She attributes the growing support for the proposal among Travelers shareholders to an array of factors, including the increasing prevalence of diversity issues in general, a growing awareness of the connection between diversity and business, and signaling from some major institutional investors that diversity is an important issue.

A Travelers spokesperson says in a statement: ‘Fostering diversity and inclusion is not just the right thing to do but a business imperative for us. We recommended that shareholders vote against the proposal in part because we felt it too narrowly defined diversity. We think about diversity much more broadly than just race and gender as called for by the proposal – our approach to diversity also encompasses ethnicity, religion, veteran status, age, disability and sexual orientation, among others.

‘While we disagreed with the approach in this proposal, we are completely aligned with its stated goals, and we’ll continue to foster a diverse and inclusive workplace. As we would with any shareholder proposal, we are carefully considering the results of the vote.’

The spokesperson also notes that the company has a diversity and inclusion website.

In arguing against the proposal, the Travelers board says in the proxy statement that the company has a long-standing commitment to diversity and inclusion and ‘we recognize it as a business imperative.’ The board oversees the company’s diversity efforts and monitors its progress, and the company talks about its workplace diversity policies and efforts on its website, the board states.

Those efforts are led by the chief diversity and inclusion officer and a diversity council, which is chaired by the CEO, according to the board, which outlines a variety of company initiatives such as providing learning and development opportunities to advance diverse leaders.

‘The board of directors does not believe that preparing an additional report describing these policies or identifying employees according to standardized EEOC-defined job categories would enhance the company’s efforts to encourage diversity and create a diverse workforce,’ the board argues.

Newell Brands also reported in an SEC filing last month that another diversity proposal received 57 percent of votes at its May 7 AGM. That proposal – also brought by Trillium – requests that the board prepare a report ‘providing its assessment of the current state of its executive leadership team diversity and its plan to make the company’s executive leadership team more diverse in terms of race, ethnicity and gender.’

According to Murphy, it was the first ever shareholder proposal specifically targeting executive diversity. She describes herself as delighted at the level of support the measure received ‘right off the bat,’ calling it as a further indication of investor appetite for transparency regarding diversity.

The Newell Brands board had urged shareholders to vote against the proposal, writing in the company’s proxy statement: ‘The company, and its leadership, is absolutely committed to diversity, inclusion and advancement. We believe we are made better and stronger by having a diverse and inclusive workforce shaping our business choices, and we are culturally enriched by having the unique perspectives of people of all backgrounds…

‘A diverse and inclusive workforce is critical to our success, and we celebrate the variety of skills, abilities, backgrounds, experiences and perspectives represented by every member of our family.’

The company hires, evaluates, promotes and compensates people without regard to any ‘legally protected status, including race, color, sexual orientation, age, religion and disability,’ the board states. It outlines steps the company has taken in recent years, such as a ‘focus on identifying persons from diverse backgrounds and with a variety of life experiences as candidates for our board of directors’ and the provision of paid parental leave for all parents.

‘[T]he board of directors does not believe the adoption of the report proposal would enhance the company’s or the board of directors’ commitment to workplace diversity and inclusiveness,’ it adds. ‘Furthermore, the requested report would divert company resources without providing real value to the company or its stockholders.’

A request for comment from Newell Brands 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...