The increased national attention to racial justice movements following the murders of George Floyd and Breonna Taylor in the summer of 2020 sparked a flurry of pledges from companies promising to do better on racial justice issues. Now, shareholders are increasingly asking for reports on how racism affects company proceedings—and making sure last year’s pledges weren’t empty promises. 

When a person owns stock directly in a company, rather than through a mutual fund, they have specific shareholder rights. Shareholders are entitled to vote on issues brought up at a company’s annual meeting, or they can submit resolutions to propose issues to vote on. Over the past few decades, groups like union pension funds, endowments held by universities, religious organizations, nonprofits, foundations, and other socially responsible investing groups have become more involved in putting together and filing resolutions. 

According to the 2021 Proxy Preview report, 46 shareholder resolutions have been filed in the 2021 proxy season asking companies to address a human rights issue in their operations. Of those 46 proposals, 18 of them are new resolutions asking for reports on how racism affects a company’s operations and how they plan to address these problems. 

Changing Company Cultures

Olivia Knight, the racial justice initiative manager for As You Sow {GBN}, an organization that educates and advocates on shareholder issues and that files resolutions, says that resolutions have been filed to make sure that companies are following up on their promises for racial justice measures. It has filed resolutions with four companies on this matter. 

“These companies did come out last summer and make all of these very broad promises, all these sweeping statements about how equitable and transparent they are, and how they want to do better on issues of racial justice,” Knight says. “Honestly, most of them have not been following up with their promises.” 
Resolutions are making a variety of requests to ensure that companies are keeping their promises. As You Sow filed resolutions with Charles Schwab, Monster Beverage, Abbott Laboratories, and Foot Locker to ask each company to prepare racial equity audits to analyze each company’s “adverse impacts on nonwhite stakeholders and communities of color,” according to the text of the resolutions. 

Knight says that, simply put, the resolutions are asking companies to report what measures they have taken to make their operations more racially equitable and to disclose data around hiring, promotion, and retention rates with regards to employee demographic data. 

“We’re hoping to see more education in these companies around anti-racism and around building a more equitable framework, but to do so, you really need to start off with disclosure and transparency,” Knight says. 

Addressing Long-Term Problems

Trillium Asset Management {GBN} has filed two resolutions with Johnson & Johnson, one of which asks for a racial equity audit. Johnson & Johnson’s influence in pharmaceuticals and consumer health, combined with the racial disparity that is already present in healthcare, is the driving force behind this resolution, according to Susan Baker, the director of shareholder advocacy for Trillium Asset Management. 

There is also the hope that, after this proxy season, racial justice resolutions will continue. 

Ivy Jack, the head of equity research for NorthStar Asset Management {GBN}, has been working in the field of socially responsible investing for about five years; before that, she worked on traditional Wall Street. The issues of race and diversity in the workplace aren’t new issues—but she does hope that the current public interest in the issue is sustained. 

“At NorthStar, we believe that diverse representation is just the first step. Ultimately, companies need to understand how systemic racism shows up in everyday work culture,” Jack says. “This is a huge undertaking, akin to running a marathon; interestingly, some corporations have signed up to run this marathon without really understanding what’s required.”

So far, Amazon, Citigroup, JPMorgan Chase, and Johnson & Johnson have all appealed to the Securities and Exchange Commission to have resolutions filed by shareholders omitted, saying that the proposals were either too vague or asking for initiatives that have already been put in place. The SEC has so far disagreed with these arguments. 

Out of the 46 racial equity resolutions filed this year, there has been one vote, five withdrawals, and 14 outstanding Securities and Exchange Commission challenges as of mid-February.

What Companies Should Do 

Many Green Americans will be wondering—“how can you tell if a company is doing enough? What does a truly antiracist company look like? How do we want companies to react to these shareholder resolutions?” 

Some corporate reports have teeth, but some don’t—we know they’re PR pieces. The same will go for racial justice reporting. —Fran Teplitz, Green America

 These are crucial questions about real change and shareholders can play a role in getting the answers. Fran Teplitz, Green America’s executive co-director for business, investing, and policy, explains that to start, transparency is often the goal. 

“Over the decades in the green movement, we went from no sustainability reporting to tons of it, but that doesn’t mean there’s more sustainability at every company,” Teplitz says. “Some corporate reports have teeth, but some don’t—we know they’re PR pieces. The same will go for racial justice reporting.”

She also points out that the wording of the resolutions is broad—while some may ask for Equal Employment Opportunity (EEO) data, others (like those in this article) ask for racial justice impacts or reports on racism within the companies. 

“The immediate benchmark in the resolutions isn’t to end racism, it’s to show us data, reports and plans that can help lead to fundamental change,” Teplitz says. “Shareholder action is an important form of pressure and signaling of what needs to change in society, and often works best when it reflects broader social movement, as we are seeing today for racial justice.” 

If You Own Stocks

Vote your proxies: Investors can expect to see these resolutions reflected on their proxy statements in the coming year at companies where resolutions have been filed. Companies may see the benefit to making requested changes or developing reports, even if only a small percent of shareholders vote in support. Check if companies where you own stock have social or environmental resolutions on the ballot.

Call your mutual funds: Individuals with their money in mutual funds can call fund managers or check online to see how these funds vote on sustainable investing resolutions. Most mutual funds vote as directed by corporate management, which too often opposes social and environmental resolutions. It is therefore important to contact your mutual fund company to say how you want it to vote. 

Keep up the momentum: Jack says that, while it’s important to recognize the good that can come from these resolutions, it’s even more important to give credit to the activists and communities that first started pushing for change. 

“Corporations are taking a stand because they're being pushed,” Jack says. “Change happens at the margins, but oftentimes, the people who get credited with the change are the people in power.”