Morningstar's "How Did Fund Companies Use Their Proxy Votes to Tackle Racial Inequality in 2020?" reports on how the 20 largest US fund providers voted on the 48 worker rights-related and diversity, equity and inclusion-related proposals that went to a vote during the 2020 proxy season (defined as July 2019 - June 2020), as enumerated in Appendix 1.
More specifically, Morningstar grouped these proposals into three large buckets:
- 25 proposals requesting transparency about workforce diversity, policies for improving board and senior management diversity, promotion patterns, and gender and racial pay equity
- 13 proposals addressing the use of mandatory arbitration provisions in employment agreements, workplace sexual harassment prevention, decent working conditions and supply chain forced labor, and specifically referencing discriminatory impacts on workers
- 10 proposals seeking greater transparency into efforts to prevent negative societal impacts of products, operations and political lobbying, referencing civil rights concerns linked to social media platforms and surveillance technologies, fair lending practices, environmental justice linked to polluting operations and lobbying activities linked to government contracts
Notably, workforce & senior management diversity and gender & racial pay equity comprised nearly half of the resolutions at 12 and 10 proposals, respectively, as shown here:
The bar chart accounts for the voting impact of affiliated or controlling shareholders. According to Morningstar, these types of proposals were more apt to be associated with companies where affiliated or controlling shareholders strongly influence vote outcomes relative to minority outside shareholders.
Average fund support varied, with TIAA voting on all and supporting 75% of the proposals, and Columbia voting on 46 and supporting 61% of the voted proposals. The balance of the voting results are set forth in Exhibit 2 of the report.
See "Big fund providers back 40% of 48 key resolutions on diversity, social justice" (Pensions & Investments) and additional resources on our Proxy Season 2020, Institutional Investors, Shareholder Proposals, Human Capital/Workforce Management and Racial Equality & Diversity pages. This post first appeared in the weekly Society Alert!