As 2020 draws to a close, we are taking stock of the impact of our shareowner engagement efforts over the course of this challenging year, and preparing our next steps for 2021. During most of 2020, our engagement priorities have focused heavily on the impacts of COVID-19 across sectors and the call to address systemic racism, especially with US companies and those with a significant US footprint. We have done this through targeted engagement, integrating this issue into our active company dialogues and our initial outreach with new holdings as part of our Workplace Racial Equity Initiative.
Despite widespread corporate adoption of diversity initiatives in recent years, the retention and promotion of employees of color has remained relatively low, with the percentage of Black managers in large US companies remaining stagnant since the 1980s. Looking to disrupt this inertia and begin moving the needle forward, we launched our Workplace Racial Equity Initiative in August, writing to nine companies[1] with questions on how they are addressing racial equity in the areas of board & executive accountability, corporate culture, data, analysis & reporting, and alignment across the value chain. All nine companies have responded to our initial survey either in writing or via direct dialogue, and nearly all have disclosed where they are on their journey, while acknowledging much more needs to be done.
In dialogues, we’ve highlighted the need for clarity on strategy oversight, with well-defined and adaptive strategies focused across the workforce from associate to executive level. We have also discussed conducting racial pay parity audits and disclosure of EEO-1 data – employment data categorized by race/ethnicity, gender, and job category that will give investors a baseline against which to measure progress.
Our early findings were mixed:
- All companies have either already conducted racial pay equity analyses or are in their first cycle
- Four companies are looking to increase their spending with diverse suppliers
- Only one-third of the companies we initially surveyed had previously published their EEO-1 data
- Systematic approaches for non-discrimination, equal opportunity, and retention saw weak responses across the board
- Questions on goals & executive compensation generated mixed results with no clear outperformers
At this stage, we are encouraged to see that some companies have disclosed or committed to disclosing EEO-1 data, and some have committed to conducting racial pay equity analyses for the first time. Most of the companies we have engaged have assigned board-level responsibility to some degree and have established cross-functional taskforces or committees to develop racial equity strategies. However, we see a lot of variance in approaches to specific strategies and mechanisms, particularly regarding retention and promotion, as well as diverse supplier spending. These underperforming areas will receive increased focus in 2021.
As we move into the next phase of our Workplace Racial Equity Initiative, we have leveraged its framework to address these issues more broadly with a diverse set of companies. If 2020 was focused on awareness building and listening with employees and other key stakeholders, 2021 will be focused on using this awareness to broaden our engagement across sectors, monitoring implementation progress for goals already established, and leveraging what we have learned as we expand our scope to include additional, much-needed interventions.
[1] Colgate-Palmolive, Estée Lauder, Procter & Gamble, Kroger, Target, TJX, GlaxoSmithKline, Novartis. and Roche
