The twin crises of police brutality and COVID-19 – both of which disproportionately kill black and brown people – have inspired many investors to consider how they can harness their assets to help right the historic wrongs of racism and white supremacy in America. The events of recent weeks have lit an even larger fire that fuels investor-led efforts to drive corporations to perform better on a wide range of measures that impact racial inequality. And corporate managers have taken note.
For example, on June 16th a coalition of 98 investors, state treasurers, public interest groups, labor unions, securities law experts, and asset managers (including Newground) issued a letter to the SEC demanding that the agency require companies to publicly disclose the risks COVID-19 and the pandemic pose to their business, and to outline their responses to those risks. Given the racial disparity in COVID-19’s impact, such disclosures would greatly enhance transparency into company responses to the pandemic, which would improve corporate performance and significantly benefit working class people.
In the 2020 proxy season – March through June, when most companies hold their annual shareholder meetings – we saw strong levels of investor support for a variety of stockholder proposals on issues that affect racial inequity, like board diversity and disclosure of racial and gender pay gaps.
On June 10th, Amazon announced a one-year moratorium on the sale of its "Rekognition" facial-recognition software to law enforcement agencies. The software has long been criticized by civil rights activists because of its tendency to misidentify women and people of color. While the move was announced after the current wave of Black Lives Matter protests had commenced, the stage had been set at the annual shareholder meeting two weeks prior, when nearly a third of all Amazon shareholders (and more than 40% of non-Bezos shares) supported two shareholder proposals that called on the company to end sales of its controversial and biased Rekognition software to police departments and federal agencies.
In the wake of George Floyd’s murder, I predict we'll see votes in favor of such shareholder proposals soar even higher. And in the 2021 proxy season, roughly nine months from now, we can expect to see a tremendous uptick in the number of shareholder proposals filed on these and other ESG topics that impact racial equity – such as divestment from private prisons, racial sensitivity training for workers, diversity in hiring, wage-gap studies and remediation, higher minimum wage standards, COVID-19 worker protection measures, and more generous employee benefits like healthcare, childcare, and family leave (which have particular benefit for communities of color).
Newground was an early pioneer in using shareholder advocacy as a tool for social justice. In fact, my introduction to shareholder engagement was through the women and men who created the South African divestment movement of the 1970s and '80s, which was instrumental in ending that country’s racist Apartheid regime. That campaign, launched by the Interfaith Center on Corporate Responsibility (ICCR), actively used shareholder proposals to pressure General Motors, Coca-Cola, and a large host of other companies to divest from South Africa, while also shifting their members' budgets and purchasing dollars away from any business that had ties to the Apartheid government.
Over the past 26 years, Newground has filed hundreds of shareholder resolutions on environmental, social, and governance (ESG) issues, including dozens that have called on companies to improve human rights, address environmental justice issues, and to adopt practices that improve racial equity.
Going forward, we commit to expanding this work and, in service to a more fair and just society, to keeping our voice raised in favor of corporate responsibility, transparency, and accountability.
We each need to act – and to compel Wall Street to behave – not as if black lives matter, but with the certain knowledge that they do.