By Levi Sumagaysay
Social-media companies and banks are some of the biggest targets. Arjuna is pushing Facebook Inc. /zigman2/quotes/205064656/composite FB +3.50% , Alphabet Inc.’s Google /zigman2/quotes/202490156/composite GOOGL +2.21% and Twitter Inc. /zigman2/quotes/203180645/composite TWTR +3.23% to add board members with human- and civil-rights expertise, saying that “these social media powerhouses have encountered criticism for perpetuating racism and hate speech on their platforms.”
Lamb said the three companies — which all expressed support of the Black Lives Matter movement and pledged donations to different racial justice organizations last year — are so influential and such “integral parts of people’s information bubbles” that asking them to put human- and civil-rights experts on their boards is “akin to asking Exxon /zigman2/quotes/204455864/composite XOM +2.48% to add a climate change expert to its board.”
“What are the fundamental issues at these companies that racism, sexism and misinformation have become synonymous with their business models?” Lamb asked.
“We have continued to make progress in addressing civil and human rights issues across our services, as well as hiring at the senior leadership level,” a Facebook spokesman said. “We intend to provide additional disclosure on our efforts in the near term.”
Twitter said it has no comment, while Google did not immediately respond.
Arjuna has had some success with similar proposals over the past few years. In December, it withdrew a resolution at Adobe Inc. /zigman2/quotes/200389143/composite ADBE +2.62% after the software company agreed to provide gender-pay disclosures immediately and median racial pay-gap information by the end of this year. Adobe became the first tech company to agree to the disclosures, joining a handful of other major companies — such as Citigroup Inc. /zigman2/quotes/207741460/composite C +1.69% , Starbucks Corp. /zigman2/quotes/207508890/composite SBUX +0.64% and MasterCard Inc. /zigman2/quotes/207581792/composite MA +1.08% — that have made the promise after pressure from Arjuna. The group also recently withdrew such a proposal at Bank of New York Mellon /zigman2/quotes/200171276/composite BK +0.17% after the bank agreed to disclose the pay-gap data.
Banks as ‘critical players’
Other banks are or could be facing race-related shareholder resolutions this proxy season. CtW Investment Group is working with the Service Employees International Union and is in various stages of urging Bank of America Corp. /zigman2/quotes/200894270/composite BAC +1.24% , Wells Fargo & Co. /zigman2/quotes/203790192/composite WFC +1.21% , Citigroup Inc. /zigman2/quotes/207741460/composite C +1.69% , Goldman Sachs Group Inc. /zigman2/quotes/209237603/composite GS +2.78% , Morgan Stanley /zigman2/quotes/209104354/composite MS +2.93% and JPMorgan Chase & Co. /zigman2/quotes/205971034/composite JPM +1.55% to “conduct a racial equity audit that identifies, prioritizes, and remedies the adverse impacts of the bank’s policies and practices on non-white stakeholders and communities of color,” according to its website.
All of these banks, which Waizenneger called “critical players” in equity issues, stated their support for racial justice last year.
“We saw Jamie Dimon taking a knee,” said Waizenegger, referring to the JPMorgan CEO who stopped by a New York branch last June and imitated a gesture popularized by former NFL quarterback Colin Kaepernick to protest police brutality and racism.
The banks have vowed to spend millions or even billions of dollars over the next few years in an effort to make things — like housing, jobs training, funding to small business, etc. — more equitable. “This is all great, but how do we know it’s really effective?” asked Waizenegger. “[The audits] would help not just to reassure shareholders but also other stakeholders that they’re actually going beyond just a photo opportunity.”
The resolution will be on Citi’s proxy, though the company tried to exclude it, Waizenegger said. It includes the following language: “Citi donated $242,000 during the 2020 election cycle to 74 members of Congress who are rated ‘F’ by the NAACP.”
“Citi is acutely focused on addressing racial inequity, especially in terms of the wealth gap it creates,” a Citi spokeswoman said. “We’ve committed over $1 billion in business initiatives to expand access to credit, invest in Black entrepreneurs, support Black homeownership, and advance anti-racist practices in the industry.” She also said the company is trying to increase Black representation in its workforce.
One company is facing what Lamb calls “a new angle” of a resolution: Arjuna is proposing that global insurance provider Chubb /zigman2/quotes/209397502/composite CB +0.82% examine how insuring municipalities affects police brutality, which are often settled with monetary payouts.
“The literature that we’ve read on this suggests that there’s an incredible amount of power that insurers have in terms of policy, training and how police departments perform,” said Lamb, who added that the resolution asks Chubb to “either reduce or not increase potential for police brutality.”
Chubb opposes the proposal. In a letter to the SEC in January, Chubb said its “activities to promote good corporate citizenship [include] promoting better relationships between police departments and their local communities.”
Investor groups say companies will continue to try to block and oppose many of their resolutions, and they expect to continue putting sustained pressure on them. Their hope for this year is that the environmental, social and corporate governance movement that has gained steam in the past few years could lead to investors aligning with the proposals at this year’s shareholder meetings no matter what the companies say.
“I think we’re going to see much broader investor support [for these resolutions]” said Meredith Benton, a consultant with As You Sow and a principal at Whistle Stop Capital. “Two years ago, there was confusion about whether all this was a material issue, and that confusion is gone.”