In this letter posted today to board chairs, State Street Global Advisors informed its US (and non-US, to the greatest extent possible) portfolio companies that it will expect communications to shareholders on workforce and board racial and ethnic diversity in these areas beginning in 2021:
1. Strategy: Articulate what role diversity plays in the firm’s broader human capital management practices and long-term strategy.
2. Goals: Describe what diversity goals exist, how these goals contribute to the firm’s overall strategy, and how these goals are managed and progressing.
3. Metrics: Provide measures of the diversity of the firm’s global employee base and board. For example:
- Workforce- Employee diversity by race, ethnicity and gender, broken down by industry-relevant employment categories or levels of seniority, for all full-time employees. In the US, companies can use the disclosure framework set forth by the United States Equal Employment Opportunity Commission’s EEO-1 Survey. Non-US companies are encouraged to disclose this information in alignment with SASB’s guidance and nationally appropriate frameworks.
- Board Level- Diversity characteristics, including racial and ethnic makeup, of the board of directors.
4. Board: Articulate goals and strategy related to racial and ethnic representation at the board level, including how the board reflects the diversity of the company’s workforce, community, customers and other key stakeholders.
5. Board oversight: Describe how the board executes its oversight role in diversity and inclusion.
The letter also asks companies to "assess barriers to entry and impediments to recruitment and retention of diverse talent, especially at senior levels of the organization."
While State Street's focus will initially be on direct engagement with a view toward understanding the company's plan and the board's oversight relative to attaining relevant goals, as is typically the case, State Street indicates it may resort to proxy voting accountability if engagement proves unsuccessful.
See this Bloomberg article.