Trillium Asset Management is this proxy season seeking to have The Travelers Companies and other issuers release disclosure about workforce diversity, at a time when companies are facing growing human capital management-related scrutiny from a range of investors.
Specifically, Trillium has filed a shareholder proposal that, if approved at next month’s AGM, would request that Travelers 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.
Human capital management – which covers a wide range of issues such as diversity, inclusion, talent development, succession planning and workplace culture and misconduct – has become an increasingly common focus of shareholder proposals over the past couple of years, although Trillium filed a workplace diversity proposal at Home Depot back in 1999.
This year the Travelers proposal is one of five workplace diversity measures filed by Trillium. According to the asset manager’s website, it filed 13 proposals on the issue in 2018, 10 of which were ultimately withdrawn after Trillium secured some form of commitment from the company involved. The three that went to votes secured backing of between 28.7 percent and 36.4 percent, according to Trillium.
Brianna Murphy, vice president and member of Trillium’s shareholder advocacy team, tells Corporate Secretary that the firm’s interest in workplace diversity evolved from its focus on diversity at the board level. She notes that some companies may be cautious about making disclosures of potentially sensitive information but adds that she reassures them none have faced litigation over doing so about diversity.
Other company objections may point to the burden of producing workplace diversity reports, but for those that already issue similar disclosures around ESG issues there should not be a major additional workload, Murphy says. The technology industry has been a leader in promoting transparency around diversity, but Trillium identified the financial services sector as one that has not made similar strides, she points out.
Given the date, Trillium does not expect to file additional proposals for the 2019 proxy season. ‘We are continuing with our focus on workplace diversity but are shifting to focus more on executive diversity, which [in itself] can affect workplace diversity,’ Murphy adds. Trillium has filed nine board/executive diversity proposals in 2019, up from four last year, according to its website.
In its proposal in the Travelers proxy statement, Trillium states that the company ‘does not disclose workforce data or disclose results of diversity initiatives. As a result, shareholders have insufficient information to determine [whether] Travelers Companies has a diverse workforce or has been successful in expanding diversity into senior and executive roles.’
Other insurance companies already release details of their diversity programs and policies and disclose workforce statistics consistent with data provided to the EEOC, according to the proposal.
A growing body of empirical research indicates ‘a significant positive relationship between [company] value and the percentage of women and people of color in senior leadership roles,’ Trillium states. It points to a McKinsey & Company report, which finds that companies in the top quartile for gender or racial ethnicity are more likely to financially outperform national industry medians.
Increasing workforce diversity requires policies and programs, Trillium argues. ‘Diversity benchmarks can help ensure companies hiring financial professionals, such as Travelers Companies, create competitive workforces. Companies that are publicly accountable to diversity goals are most likely to make rapid progress toward achieving their goals,’ it adds.
In arguing against the proposals, the Travelers board states 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 says.
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.
A spokesperson for Travelers did not respond to a request for comment.