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Racial Equity

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Despite management opposition, investors are pressuring companies into auditing themselves for whether their policies discriminate based on race.


Amid a resurgence of racial-justice activism, corporations have come under pressure to address racial equity at work. The gap between white and minority pay remains large in the United States, as does the gap between white and minority representation among executives and board members. Activists have also begun to focus on environmental justice issues arising from decisions about where to locate polluting facilities.


One way investors can advance racial justice is to practice active ownership by voting on shareholder resolutions that ask for racial equity audits—independent examinations of whether a company’s policies discriminate based on race. According to Morningstar Sustainalytics’ proxy data feed, shareholders voted on 21 racial equity audit proposals in 2022, up from eight in 2021.


Five of this year’s resolutions targeted environmental justice. A proposal for Chevron, for example, called for its audit to “clearly identify, and recommend steps to eliminate business activities that further systemic racism, environmental injustice, threaten civil rights, or present barriers to diversity, equity and inclusion.”


This year’s proposals attracted strong support. A majority of investors at Altria, Apple, Johnson & Johnson, Lowe’s, Stericycle, Home Depot and Waste Management voted in favor of audits, all of them against management recommendations. According to Sustainalytics, support for resolutions focused on racial equity audits grew to 46% in 2022, up from 33% in 2021. The five resolutions that included environmental justice in their language achieved 46% support, on average.


Shareholders withdrew a resolution at JPMorgan Chase after the company agreed to conduct a racial equity audit of how its practices affect employees and other stakeholders. The bank has established four racial-equity goals: to promote affordable housing, grow minority-owned businesses, improve access to banking, and build a more diverse workforce.

majority shareholder support for racial equity audits, 2022
Data Source: Morningstar Sustainalytics Proxy Data Feed


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