EQUITY IN THE
BOARDROOM
2023 Proxy Season

March 2024

Page 2This report was made possible by the generous
support of the Omidyar Network, The Ford
Foundation, Wallace Global Fund, Marguerite
Casey Foundation, The McKnight Foundation, The Nathan Cummings Foundation, The
Park Foundation, and anonymous donors. Majority Action receives no funding from nor has
any commercial relationship with any issuer,
asset manager, or proxy advisor analyzed inthis report. The information in this report has
been prepared from sources and data the authors believe to be reliable, but we assume no
liability for and make no guarantee as to its adequacy, accuracy, timeliness, or completeness.
The information in this report is not designed

to be investment advice regarding any security, company, industry, or fund, and should not
be relied upon to make investment decisions.
No information herein is intended as an offer,or solicitation of an offer, to sell or buy, or asa sponsorship of any company, security, fund,or product. Opinions expressed and facts stated herein are subject to change without notice.
This study uses data obtained under licensefrom Diligent Market Intelligence between
December 15, 2023 and February 25, 2024, custom data purchased from ISS ESG Solutions
on August 9, 2023, and 2022 and 2023 proxyvote analyses purchased from ISS Corporate
Solutions.

Executive Summary

Page 3

Executive Summary
Besides being a moral failing, racial inequity
poses idiosyncratic and systemic risks that
depress returns for long-term diversified investors. At the company level, entrenchedracial discrimination exacts legal, political,
reputational, operational, and governancecosts while constraining consumer spending
and hampering productivity and profitability.
At the portfolio level, systemic racism threatens long-term returns across asset classes bygenerating industry and economy-wide negative externalities and impeding inclusive andbroad-based economic growth. Fiduciaries
must adopt a racial equity lens to proxy voting in order to effectively mitigate the risksof systemic racism, which cannot simply bediversified away.

This report analyzes how the eighteen largest
asset managers and two leading proxy advisors voted/recommended on five key proxyvoting categories related to racial equity: racial equity audits, racial and ethnic board
diversity, political spending and lobbying
disclosure, political congruency, and freedom of association and collective bargaining. Asset managers’ support for racial equity-related proxy votes slowed considerably
in 2023 against the backdrop of coordinatedright-wing attacks on civil rights, affirmative
action, and voting rights, and the related politicization of environmental, social, and governance (ESG) investment strategies. Assetmanagers’ inaction on systemic racism comesat the expense of not only communities ofcolor who bear the brunt of harmful corporate behaviors, but also the tens of millions ofworker-savers – many of whom are people ofcolor themselves – seeking long-term returns
on their retirement portfolios. Against current
political headwinds, asset managers must riseto the occasion and use their proxy voting
power to address systemic racism – consistent with their fiduciary duty to mitigate risk,
protect the value of client assets, and fortify
long-term investment returns.

Summary Of Findings

Amundi
LGIM
Northern TrustMorgan Stanley

Racial Equity
Audit Proposals

Director Accountability
for All-White Boards

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ISS.
Glass Lewis.
NuveenFranklin Templeton●●●

Wellington
InvescoState Street
Geode
Fidelity
BNY Mellon
Goldman Sachs
JPMorgan
Capital Group
T. Rowe Price
Vanguard
BlackRock

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Political Spending &Lobbying Disclosure
Proposals

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Political Congruency
Proposals

Freedom of Association
Proposals

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Top-tier voting record
Bottom-tier voting record●●

Figure 1: Summary of Findings
Notes: For shareholder proposals, an asset manager is defined as being in the “top-tier” if it supported at least 75 percent of proposals and being in the “bottom-tier” if it supported less than 25 percent of proposals.
For director accountability for racial and ethnic board diversity, an asset manager is defined as being in the “top-tier” if it voted against the reelection of at least 5 out of 7 (71 percent) nominating committee members at
the three S&P 500 companies with all-white boards, and being in the “bottom-tier” if it voted against less than 2 out of 7 nominating committee members (29 percent)Executive Summary

Page 4

Key Findings

01

02

The Big Four asset managers –BlackRock, Vanguard, Fidelity, and State
Street – ranked at or near the bottom on all
five racial equity-related proxy voting categories. BlackRock and Vanguard – together
with T. Rowe Price and Capital Group – hadthe worst racial equity voting records. On aver-age, the Big Four supported just six percent of racial equity
audit proposals, fifteen percent of political spending andlobbying disclosure proposals, no political congruency proposals, and fifteen percent of freedom of association andcollective bargaining proposals. State Street and Fidelity
voted for a slightly higher percentage of racial equity audit,
political spending and lobbying disclosure, and freedom of
association and collective bargaining proposals than BlackRock and Vanguard. State Street and Fidelity also proved
more willing than BlackRock and Vanguard to vote against
nominating committee members at companies with noracial or ethnic board representation. By contrast, Amundi
and Legal & General Investment Management (LGIM) had
the best voting records across all five proxy voting categories, while Northern Trust had the best voting record in fourout of five categories.

Fourteen out of eighteen asset managers
supported a smaller percentage of racial equity audit proposals in 2023 than in 2022. The

biggest backsliders – Capital Group, BNY Mellon, BlackRock, Geode, and Invesco – decreased their support for
racial equity audit proposals by more than forty percentage
points. Of the Big Four, Vanguard and Fidelity continued
to oppose most or all racial equity audit proposals, while
BlackRock and State Street decreased their support substantially compared to last AGM season. BlackRock wentfrom supporting over half of all racial equity audit proposals in 2022 to none in 2023, while State Street’s support forsuch proposals declined by 32 percentage points. Support
among proxy advisors also decreased. Both ISS and Glass
Lewis supported 76 percent of racial equity audit proposals
in 2022. That number dropped to 36 percent and fifty seven percent, respectively, in 2023. Still, some asset managers
continued to be leaders in this area, with LGIM, Northern
Trust, Amundi, and Morgan Stanley supporting most or all
racial equity audit proposals.

03

04
05
06

Asset managers set a low bar for racial andethnic board representation and did not holdboards accountable for board diversity failures. According to their 2023 proxy voting policies, mostasset managers consider an S&P 500 board to be sufficiently diverse if it includes a single director of color. Given thatthe average S&P 500 board contains eleven members, thissets the floor at merely nine percent racial and ethnic representation – a far cry from the racially and ethnically diverse
US population, which is currently 41 percent. While mostasset managers’ proxy voting policies permit using director
elections to hold boards accountable to minimum racialand ethnic diversity expectations, only some asset managers actually deployed this lever. Just two asset managers– Nuveen and Goldman Sachs – voted against all nominating and governance committee members at the three S&P
500 companies that nominated no directors of color. Seven
asset managers, including BlackRock and Vanguard, voted
to re-elect all nominating and governance committee members across these same three companies.

Despite the fact that 98% of S&P 500 companies do not disclose how much they spend
on state-level lobbying, the Big Four opposedalmost all lobbying disclosure proposals. Of

the nineteen lobbying disclosure proposals that were put
to a vote in 2023, Fidelity supported none, BlackRock andVanguard each supported one, and State Street supported
three. All four asset managers voted against the lobbying
disclosure proposal at McDonald’s, which was the only political spending and lobbying disclosure proposal to receive
majority support in 2023. The Big Four’s voting behavior diverged sharply from the recommendations of ISS and Glass
Lewis, which supported 89 and 74 percent, respectively, oflobbying disclosure proposals.

Asset manager support for political congruency proposals declined significantly in
2023. The 2022 midterm elections exposed glaring mis-alignments between corporations’ public statements andtheir political activities. Many companies resumed political contributions to election deniers, belying the commitments they made to voting rights and election integrity inthe wake of the January 6th insurrection. However, asset
manager support for political congruency proposals, which
ask companies to identify and address these types of misalignments, declined significantly in 2023.

Asset managers diverged sharply from bothproxy advisors on freedom of associationand collective bargaining. Fourteen asset manag-

ers voted for a lower percentage of freedom of association
proposals than were recommended by Glass Lewis andISS, who supported 100 and 86 percent of such proposals,
respectively. State Street, BlackRock, and Vanguard voted
against the proposal at Starbucks, which was the only freedom of association proposal to get majority support.

Table Of Contents

Page 5

Table Of Contents
01
02

Introduction
Racial Equity Audits

Recommendations for Proxy Advisors

07

Director Accountability
for Racial and Ethnic
Board Diversity

Freedom of
Association andCollective Bargaining
2024 AGM Season: Proxy Contest at Starbucks

Appendix A: Data Sources and Methodology

Appendix C: List of Shareholder Proposals
Appendix D: List of Voting Entities as Listed in
Diligent
Appendix E: Asset Managers’ and Proxy Advisors’
2023 Policies on Racial Equity Audits
Appendix F: Asset Managers’ and Proxy Advisors’
2023 Policies on Director Accountability for Racialand Ethnic Board Diversity

Corporate Political
Transparency
Case Studies: Lobbying Disclosure Proposal at Eli Lilly
and Political Congruency Proposal at Wells Fargo

Appendices
Appendix B: List of Asset Managers

2024 AGM Season: Vanguard Backtracks
on Diversity Commitments

05

Additional Recommendations for Asset Owners

Recommendations for Policymakers and Regulators

2024 AGM Season: Racial Equity
Audit Proposal at Walmart

04

Recommendations for Asset Managers and Investors

What Makes a Racial Equity Audit?
Case Studies: Racial Equity Audit Proposal
at Travelers and Director Vote at JPMorgan

03

06

Recommendations

08

EndnotesSection 01: Introduction

Page 6Introduction

01Section 01: Introduction

Page 7The coordinated and well-funded attacks
on racial progress in corporate America
shouldn’t surprise any of us. This targeted

campaign is designed to close the door forour communities to employment, contracts,
and other opportunities. The individuals andinstitutions behind these efforts want to dragthis country backward and some of them haveeven set their sights on historic policies thatban discrimination like the Civil Rights Act
of 1965. The question for any government or
corporate leader is what side of history are youon? The disingenuous attacks on racial equity
audits, affirmative action, and corporate DEI are
designed to get us to defend or abandon solutions
to discrimination, exclusion, and privilege —instead of focusing on dismantling these deepseated problems that prevent us from having afair and equitable economy and democracy. Long
after the 2024 election is over we will remember
the actions - not just the words - in response tothese attacks on equity and inclusion from major
corporations and their leadership.”— Rashad Robinson, President of Color of Change

Section 01: Introduction

The murders of George
Floyd, Ahmaud Arbery,
and Breonna Taylor
in 2020 and the insurrection at the US Capitolon January 6, 2021 prompted a racial reckoning within corporate America. Corporations
issued statements decrying systemic racism,committed to ending discriminatory product lines and business practices, pledged to
expand diversity, equity, and inclusion (DEI)
initiatives, and publicly acknowledged thebusiness case for racial equity.1 CEOs voiced
support for voting rights, and companies
promised to cease political donations to election deniers.2
Three years later, systemic racism continues
to shortchange the lives of people of color, yet
corporate leaders are no longer demonstrating
the urgency to act.3 Companies are reneging
on racial equity pledges, phasing out DEI programs that they no longer see as “core” to theirbusiness, and resuming contributions to political groups and candidates trumpeting voter suppression.4 Whereas 190 publicly traded
companies mentioned the word “racism” intheir earnings calls following George Floyd’s
murder, that number plummeted to just 11 in
2023, suggesting that racism “doesn’t appear
anymore in corporate conversations with WallStreet.”5 This corporate backsliding is occurring amidst coordinated attacks by right-winglawmakers and legal activists on DEI, funding
to minority-owned businesses, affirmative action, critical race theory, voting rights, and theright to protest and organize.6
Despite this challenging corporate environment, investors have continued to engage withcompanies on racial equity matters throughthe proxy voting process. However, just likethe world’s largest companies, the world’s largest asset managers are retreating in their support for such efforts. Our report shows that
although some asset managers – Amundi,
LGIM, Northern Trust, and to a lesser extent
Morgan Stanley – continue to lead on racial
equity stewardship, many of the largest asset
managers were largely unsupportive of racial
equity-related shareholder proposals. Our
report also shows that most asset managers
failed to hold companies with all-white boards

accountable for lack of racial and ethnic board
diversity, despite the fact that their proxy voting policies permit them to vote against directors when boards do not meet minimum racialand ethnic diversity standards.
In particular, the “Big Four” asset managers— BlackRock, Fidelity, State Street, and Vanguard – not only lagged behind most of theirpeers on nearly all measures, two of them –BlackRock and State Street – took a step backwards. BlackRock, for example, supported overhalf of all racial equity audit proposals in 2022
but supported none in 2023 – an about-facethat contradicts CEO Larry Fink’s 2020 statement, “To better serve our clients, we will focus on racial equity and social justice in ourinvestment and stewardship activities.”7 State
Street published its own civil rights audit report in May 2023. In it, the auditors recommended that the Global Advisors stewardshipteam consider portfolio companies’ “litigation,
reputational, and regulatory exposure regarding the full range of risks related to civil rights,”
including but not limited to “marketing practices for products and services that may be
harmful to [Black, Indigenous, People of Color] communities.”8 Yet, State Street’s support
for racial equity audits – a tool developed to
identify and evaluate precisely these types ofrisks – decreased by 32 percentage points inthe 2023 proxy season.
Large asset managers’ retreat on racial equity
is transpiring amidst the right-wing politicization of “environmental, social, and governance” (ESG) investment strategies, an effort
backed by many of the same actors behind theattacks on DEI, affirmative action, and criticalrace theory.9 Spearheaded by the fossil fuel industry, the primary focus of the anti-ESG pushhas been to preclude investors from considering climate risks, although anti-ESG advocateshave also targeted shareholder engagement
related to antiracism and diversity initiatives,
workers’ rights, and corporate governance.
During the 2023 legislative session, rightwing lawmakers introduced 165 anti-ESG bills
across 37 states seeking to prevent investors

Page 8from considering commonsense systemic or
long-term risk factors in the management ofgovernment funds and pension assets.10 At thefederal level, the Republican-controlled Houseof Representatives held a series of hearings,
marked up eight bills, and subpoenaed proxyadvisors and asset managers over ESG investing.11 Lawmakers and state attorneys general
mounted unsuccessful legislative and legal
challenges to the Department of Labor’s 2022
final rule permitting fiduciaries of Employee
Retirement Income Security Act plans to consider ESG factors when relevant to a risk-return analysis.12
Despite the breadth of this right-wing onslaught, it has had limited success in actuallychanging state or federal laws governing whatrisk factors fiduciaries can consider in proxyvoting or investment decisions.13 The politicization of ESG risks is also broadly unpopularamong American voters, many of whom arediversified investors seeking long-term returns
on their retirement portfolios. A December
2023 poll found that a majority of voters, including 52 percent of Republicans and 63
percent of Independents, do not support theanti-ESG bills advanced by the House Financial Services Committee in July 2023.14 Nevertheless, the anti-ESG campaign – combinedwith the related attacks on affirmative action
and civil rights – has had what has been described as a “chilling effect” on investors.15
Asset managers’ inaction on racial equity
proxy voting matters can be understood inpart as a capitulation to the right-wing’s multipronged assault on racial progress and climate
science. Ultimately, this inaction comes at theexpense of tens of millions of workers – manyof whom are people of color themselves –whose deferred wages are invested in retirement portfolios that are exposed to the risks ofsystemic racism and climate change. Indeed,
as we discuss in the next section, racial equity
is not just a moral imperative. Systemic racism
poses material investment risks and depresses returns at both the company and portfolio
level. As we approach both the 2024 proxyseason and the 2024 presidential election,
the disingenuous attacks on ESG, DEI, andcivil rights are likely to intensify. Against
these headwinds, asset managers must riseto the occasion and use their proxy voting
power to address racial inequity, consistent with their fiduciary duty to mitigate
risk, protect the value of client assets, andfortify long-term investment returns.

Section 01: Introduction

Page 9

Racial inequity is a system-levelrisk, much like climate change andincome inequality – both material
and non-diversifiable. Given the
feedback loops between thereal world and financial markets,
investors have an obligation to act
to mitigate these intergenerationalrisks in accordance with the fiduciary
duties of prudence, care, and loyalty.”— Monique Aiken, Managing Director of The Investment Integration Project

Racial Inequity and
Systemic Risk
Systemic racism is an organized systemof generating and perpetuating differential
opportunities based on racial hierarchy.16 It
includes “norms, ideologies, culture and history, as well as interconnected institutions,policies, laws and structures that designate
and maintain differential and unequal value ofindividuals and groups based on their race.”17
The United States economy was built on the“appropriation of the physical, financial, labor,
and other resources of non-white people,” including but not limited to the enslavement ofBlack people, the dispossession of Indigenous
nations, the exploitation of Asian and Latino
migrants, and the imperial conquest of Native
Hawaiian and Pacific Islander communities.18

Systemic racism captures the ways in whichinterlocking societal systems – such as thefinancial, economic, political, educational,
health, and criminal legal systems – continuously reproduce and deepen these historical
racial violences, putting Black, Indigenous,
and people of color (BIPOC) communities
at compounded disadvantage in relation towhite people. Systemic racism is “so embedded in systems that it often is assumed to reflect the natural, inevitable order of things,”
and it is one reason racial disparities in the US
remain so intractable and entrenched.19
Systemic racism produces racial inequity, or
the unequal distribution of resources, power,

and opportunity along racial lines.20 Racial inequity manifests as persistent unequal participation and outcomes related to democracy,
education, income, health, housing, the labormarket, and more.21 The most pervasive andself-perpetuating of these inequities is the racial wealth gap: In the US, white people make73 percent more in annual income, are nearly two times more likely to own their homes,
and hold ten times more wealth than Black
people.22 As one study puts it, “Wealth is theaccumulation of past and present income, assets, debts, and disparities.”23 The racial wealthgap is the cumulative effect of slavery, land
theft, segregation, redlining, occupational segregation, mass incarceration, unfair tax policy,
predatory lending, and systemic barriers to
education, homeownership, and economic
mobility.24
Corporations are key drivers of systemic racism and racial inequity. Conceptually, the development of modern business and financecannot be disentangled from the history ofslavery and anti-Black racism. Prior to becoming the center of global financial markets,
Wall Street was the site of New York City’sfirst organized slave auction.25 The growthof America’s banking and insurance sectors
was fueled by the slave trade: Banks issued
securities funding the expansion of plantations, and insurance companies sold policies
on the lives of enslaved people.26 Many of thebusiness management practices, accounting
techniques, and financial instruments thatare still in use today were pioneered as partof the plantation economy.27 Today, corporations perpetuate racial inequity in a number ofways, including discriminating against workers of color, disposing toxic chemical waste inBlack and Brown neighborhoods, marketing
predatory and/or harmful products to BIPOC
consumers, and engaging in business models
and practices that lead to racial disparities.28
In economics terms, communities of color are
the “ideal dumping grounds for negative externalities generated by the private sector.”29
Asset managers have a fiduciary duty to theirclients and beneficiaries to enhance risk-adjusted returns and mitigate investment risks.
Investment theory distinguishes between two
categories of investment risks: idiosyncraticrisk and systematic risk. Idiosyncratic risk is
specific to a particular company or industry,
and it can largely be managed through diversification. Systematic risk, on the other hand,is non-diversifiable and affects all securities ina portfolio. Jon Lukomnik and James Hawley
further distinguish between systematic risk
and systemic risk, which refers to risks that
endanger the functioning of the real-world economic, social, and financial systems on which
the capital markets rely.30 Systemic risks in thereal-world create non-diversifiable systematic
risk in the financial markets. Research showsthat systematic risk, not idiosyncratic risk, determines the vast majority of the variability of
return for a portfolio.31 For broadly diversified
asset managers and institutional investors thathave minimal exposure to idiosyncratic risk, it
makes rational sense to focus on reducing thedrivers of systemic risk, which are inputs into
systematic market risk.32 Moreover, focusing
on mitigating systemic risk shifts investment
strategy from simply being about beating
the market return through security selection
to improving overall market performancethrough real-world intervention.33
Racial inequity is an idiosyncratic and systemic risk that depresses risk-adjusted returns forindividual securities as well as entire portfolios. At the company level, racial inequity is a“sign of poor management as well as exposure
to political and consumer risk.”34 Companies
engaged in racial discrimination are subject toSection 01: Introduction

Page 10increased risk in the form of legal actions, regulatory sanctions, heightened scrutiny fromlawmakers, reputational damage, and consumer boycotts. Racially inequitable businesspractices can jeopardize a company’s social
license to operate.35 Conversely, racial equity
can be a source of competitive advantage. A
number of studies have found that diversity
and inclusion imperatives have a positive material impact on a company’s financial condition, operating performance, ability to attract
and retain talent, and corporate governance.36
Companies that prioritize racial equity can
unlock new markets and sources of growth bydeveloping innovative products and services
that simultaneously reduce inequities andmeet the needs of people of color.37

on board diversity, racial equity audits, and
DEI disclosures to also examining the racial
equity implications of director elections, executive compensation, mergers and acquisitions,and shareholder proposals on topics as varied
as corporate political transparency, workers’
rights, and climate risks. By adopting a racial equity lens to stewardship and proxyvoting, asset managers can use their power as shareholders to reshape corporate
behavior in ways that create inclusive andbroad-based economic growth while fortifying and enhancing returns for long-term
diversified investors.

More importantly, racial inequity is a systemicrisk that threatens and degrades the economic, political, and social systems on which portfolio returns depend. Numerous studies haveshown that systemic racism impairs GDP
growth, which is a key component of systematic risk. A 2020 study by Citi found that
$16 trillion could have been added to the US
economy if Black-white inequities in wages,
education, housing, and investment had beenclosed twenty years ago.38 A report by the W.K.
Kellogg Foundation estimated that closing the
racial earnings gap by 2050 would boost U.S
GDP by $8 trillion, augment effective demandby generating $2.6 trillion in new consumer
spending, and accelerate the annual longterm growth rate for the US economy by halfa percentage point.39 Racial inequity can also
lead to social discontent and unrest, which
can increase market volatility and uncertainty,
create political and economic instability, andnegatively impact investment opportunities
across all asset classes.40
Large asset managers can mitigate the systemic risks of racial inequity by adopting a racial
equity lens to system-level stewardship.41 As
discussed earlier, corporate actions are key
drivers of systemic racism and racial inequity.
Central to system-level stewardship is the notion that as “universal owners,” broadly diversified asset managers and institutional investors“internalize” the negative externalities generated by harmful corporate actions through lower
portfolio returns.42 System-level stewardshipinvolves taking a portfolio-wide approach toproxy voting and shareholder engagement thataims to minimize the economy-wide costs ofsystemic racism.43 Given the labyrinthine andwide-ranging reach of systemic racism, a racial
equity lens to system-level stewardship would
go beyond supporting shareholder proposals

Section 01: Introduction

Page 11Equity in the
Boardroom 2023
This report analyzes how the eighteen largest asset managers and two leading proxyadvisors voted/recommended on racial equity-related matters at S&P 500 companies in
the 2023 proxy season, with a focus on racial
equity audits, racial and ethnic board diversity,
corporate political transparency, and workers’
right to organize.
The eighteen asset managers examined in thisreport each have over $1 trillion in worldwide
assets under management (AUM)44 and an
asset mix of at least twenty percent equities.
Collectively, they manage upwards of $45 trillion in worldwide assets – more than the combined GDP of the United States and China.45
With over $33 trillion in US client assets, theseasset managers are responsible for the investments of tens of millions of American workers
who have 401K plans, Individual Retirement
Arrangements (IRAs), 529 college savings
plans, Health Savings Accounts (HSAs), andexchange traded funds (ETFs).46 As Figure 2
shows, the asset managers examined in thisreport are some of the largest managers of US
workers’ institutional retirement savings, withover $6.5 trillion in defined contribution assets and $1.6 trillion indefined benefit assets.47
BlackRock alone manages retirement plan
assets for over one-third of US public school
teachers.48
This report pays particular attention to thevoting record of the Big Four asset managers.
The Big Four manage over $18.4 trillion in US
client assets, hold more than twenty percentof shares in the S&P 500, and account for
more than 25 percent of shares voted.49 Given
their substantial holdings, they wield outsized
power in the proxy voting process and often
play a decisive role in the outcomes of shareholder proposals and director elections. As weshow, a number of racial equity-related shareholder proposals could have reached majority
support had the Big Four voted in favor.
For the first time, this year’s report examines
the voting recommendations of the two leading proxy advisors, Institutional Shareholder
Services (ISS) and Glass Lewis. The amountof impact the proxy advisors have on theproxy process has been a subject of debate inrecent years. The growing influence of ISS andGlass Lewis has corresponded with the rise of
low-cost passively managed funds such as exchange-traded funds and index funds, whichmust vote their shares but may allocate few
resources to the process.50 One study findsthat when either ISS or Glass Lewis issues a
recommendation opposing management, itscustomers are twenty percentage points more
likely to oppose management compared toother investors.51 Depending on the level of client uptake, the introduction of pass-throughvoting could also increase the proxy advisors’
influence on voting outcomes,52 since the alternative voting policies offered through proxychoice programs are usually compiled by ISS
and/or Glass Lewis.53
The rest of this report is organized as follows:
Section 2 opens with a discussion of corporate racial equity audits as a tool for mitigating
the risks of systemic racism and proceeds toanalyze asset managers’ and proxy advisors’
votes/recommendations on racial equity audit
shareholder proposals. Section 3 looks at director accountability for racial and ethnic board
diversity with a focus on asset managers’ andproxy advisors’ votes/recommendations on director elections at the three S&P 500 companies that ran all-white slates of director nominees. Sections 2 and 3 also include an analysisof asset managers and proxy advisors’ proxyvoting policies related to racial equity audits
and racial and ethnic board diversity, respectively. Section 4 examines asset managers’
and proxy advisors’ votes/recommendations
on two types of shareholder proposals related
to corporate political transparency, politicalspending and lobbying disclosure proposals
and political congruency proposals. Section 5
looks at proxy votes on shareholder proposals
related to workers’ rights to freedom of association and collective bargaining. While corporate political transparency and freedom of
association may not seem immediately relevant to racial equity, these two sections showthat unbridled corporate influence in democratic institutions and corporate interference
in worker organizing play critical roles in thedisenfranchisement and exploitation of BIPOC communities. Each section also makes
an argument for why the issue at hand – racial
equity audits, racial and ethnic board diversity,
corporate political transparency, and workers’
right to organize – should matter to diversified
investors pursuing long-term returns.

Largest Managers of US Defined Benefit & DefinedContribution Assets (Billions of Dollars in AUM)

542

VANGUARD

BNY MELLON218

MORGAN STANLEYWELLINGTON86

STATE STREET

96

510

NUVEEN
T. ROWE PRICE

1,783 1,714
940
FIDELITY987

483 381BLACKROCK301

NORTHERN TRUSTJPMORGANCAPITAL GROUP

Figure 2: Largest Managers of US Defined Benefit & Defined Contribution Assets (Billions of Dollars in AUM)
Source: Majority Action analysis of data obtained from Pension & Investments
Note: Does not include Prudential Financial and PIMCO, who manage $386 billion and $189 billion, respectively, in defined
benefit and defined contribution assets

Section 02: Racial Equity Audits

Page 12

Racial Equity
Audits02

Section 02: Racial Equity Audits

Page 13

Racial equity audits can be a positive tool for
identifying and ameliorating racial inequities
in a business. By looking across policies,
practices, and products, companies can start
to understand potential blind spots and create
solutions that benefit all stakeholders…While
this mechanism can be viewed as a means ofrisk mitigation, we believe it can also ultimately
unlock new opportunities for value creation forthe business and the broader economy.”54­— Clare Payn, Legal and General Investment Management
A racial equity audit is a systematic and comprehensive analysis of a company’s policies,
practices, products, and services for discriminatory or disparate impact on BIPOC stakeholders. These stakeholders include but are
not limited to workers, current and potential
customers, suppliers, and communities subjected to a firm’s negative externalities, suchas pollution or toxic chemicals. Conductedby independent auditors with civil rights andracial justice expertise, racial equity audits
identify problems, propose recommendations,and create concrete remediation plans and accountability structures. As part of the auditing
process, auditors typically collect informationand data from workers, company leadership,
impacted communities, and civil rights andadvocacy organizations. Crucially, racial equity audits go beyond workforce DEI and corporate social responsibility initiatives to examine
the ways in which a company’s core businessmodel, products, and operations perpetuatesystemic racism.55 As Heather McGhee andSherrilyn Ifill note, while diversity and inclusion “are essential components of an ultimate
goal of a racially equitable institution,” they do
not guarantee “that the company’s systems,
practices, and policies are designed to create
racially equitable outcomes.56
Corporate racial equity or civil rights audits57
were initially pioneered by civil rights organizations and leaders as a strategy to gettechnology companies to address discrim-

ination and bias on their platforms. The first
corporate civil rights audit was conducted in2016 by Airbnb under pressure from Color of
Change after reports surfaced of Black users
being discriminated against by hosts.58 In 2018,
Facebook commissioned a civil rights audit at
the urging of members of Congress and civilrights groups, who had been engaging with thecompany for years on how its policies affected
members of protected classes.59 Led by civilrights attorney Laura Murphy, the Airbnb andFacebook audits set the standard for rigorous
third-party racial equity audits and generated
numerous learnings about the opportunities
and limitations of this approach to corporate
accountability.60
The Airbnb audit in particular set the bar fora successful audit because Airbnb a) implemented a “multipronged and concerted set ofchanges” to tackle the problems identified by
the auditors,61 b) worked collaboratively withstakeholders, and c) demonstrated a commitment to transparency and public accountability. Laura Murphy’s 2016 audit examined various aspects of Airbnb’s business, including
how its platform shaped interactions between
users, its policies governing user conduct,
its policy enforcement processes, its lack ofworkforce diversity, and its partnerships withcivil society organizations.62 As a result of theaudit, Airbnb agreed to make a number ofchanges, including implementing stronger anti-discrimination policies, improving enforce-

ment and response protocols, expanding its“Instant Book” feature which reduces the potential for bias, and assembling a permanentanti-bias team of data professionals.63 Airbnb
issued supplemental reports in 2019 and 2022
relaying the company’s progress on its racial
justice goals.64
In 2020, Airbnb launched a data analysis initiative called Project Lighthouse in partnershipwith Color of Change and with input fromprivacy and racial justice groups. The goal of
Project Lighthouse was to measure bias anddiscrimination on Airbnb’s platform “with thebelief that you can’t fix what you can’t measure.”65 Airbnb’s 2022 report detailed the findings of Project Lighthouse and described how
the company planned to use these findings to
inform and target its anti-discrimination efforts. Among other things, Project Lighthouserevealed that while Instant Book is an effective tool to reduce discrimination, Black users
were accessing Instant Book at lower rates because they were less likely to meet the criteria
for eligibility.66 As a result, Airbnb introduced
policy changes that would make it easier for
people to use Instant Book.67 Despite the successes of the Airbnb audit, it has not been
without challenges. Although it is one of the
few tech companies to establish a permanentanti-bias team, employees have said that thecompany has failed to adequately resource theteam, leading to otherwise preventable racialdisparities slipping through the cracks.68

Section 02: Racial Equity Audits

Page 14

Bringing Racial Equity
Audits into the Investor
Ecosystem
Investors initially imported corporate racial
equity audits into the shareholder ecosystem
as a way to hold companies accountable to
the racial justice commitments they made in
the summer of 2020 following the murder ofGeorge Floyd. Advocates and investors believed that without a tool to identify problems
and measure progress, these corporate commitments could prove to be illusory. Under theleadership of Renaye Manley, Deputy Directorof Strategic Initiatives at Service Employees
International Union (SEIU), investors including SEIU Master Trust and Change to Win(CtW) Investment Group (now SOC Investment Group) filed twelve racial equity audit
proposals in the 2021 proxy season. Since then,shareholders have voted on 67 racial equity audit proposals across 49 S&P 500 companies.69
For investors, racial equity audits are not justa way to hold companies responsible for theirprofessed racial justice commitments. They
are also a tool to mitigate the risk that systemic racism poses to companies and portfolios.
By diagnosing problem areas and charting acourse for remediation, racial equity audits
enable companies to identify and manage
the legal, regulatory, political, and reputational risks associated with racial discrimination
and bias. Beyond mitigating risk, racial equity
audits can also provide companies a competitive edge when it comes to building productsthat appeal to BIPOC consumers and hiringand retaining talent from a rapidly diversifying
US labor force. For diversified investors whose
fiduciaries have a duty to minimize risk andmaximize long-term returns, the benefits ofracial equity auditing begin to accrue whenfirms across industries use the tool to takeconcrete remedial actions, collectively minimizing the externalities and inefficiencies
caused by systemic racism and unlocking possibilities for economy-wide value creation.
Despite the persistence of systemic racism,shareholder support for racial equity audit proposals fell significantly in 2023 compared toprevious years. Of the fourteen proposals put

to a vote in 2023, none reached majority support and only 29 percent received greater than
thirty percent support. In contrast, in 2022, 32
percent of racial equity proposals reached majority support, and 84 percent received greaterthan thirty percent support. Average support
for racial equity audit proposals increased
from 33 percent in 2021 to 44 percent in 2022,
and then declined to 21 percent in 2023.
As illustrated by Figures 3 and 4, fourteenout of eighteen asset managers supported
a smaller percentage of racial equity audit
proposals in 2023 than in 2022. The biggest backsliders were Capital Group, BNY
Mellon, BlackRock, Geode, ISS, and Invesco, whose support for racial equity audit
proposals decreased by more than forty
percentage points.
Of the Big Four, Vanguard and Fidelity
continued to oppose most or all racial equity audit proposals. BlackRock went fromsupporting over half of all racial equity
audit proposals in 2022 to none in 2023,
while State Street’s support for such proposals declined by 32 percentage points.
Among the proxy advisors, ISS exhibiteda steeper drop in support (43 percentage
points) than Glass Lewis (22 percentage
points). Whereas both proxy advisors supported 79 percent of proposals in 2022, ISS
supported just 36 percent in 2023, while Glass
Lewis supported a little over half. Still, someasset managers continued to be leaders on
racial equity audits. Amundi supported 100
percent of racial equity audit proposals,
LGIM and Northern Trust supported 93
percent, and Morgan Stanley supported 79
percent.
Most asset managers’ proxy voting policies
are silent on the subject of racial equity audits. However, LGIM, Goldman Sachs, andFranklin Templeton subsidiary ClearBridge
have specific policy language related to racial
equity audits, as do ISS and Glass Lewis (seeAppendix E for the language used in eachproxy voting policy). These policies provide
a window into how asset managers evaluate
racial equity audit proposals. Goldman Sachs,
ClearBridge, ISS, and Glass Lewis all state thatthey evaluate racial equity audit proposals
on a “case-by-case” basis, taking into consideration factors such as existing levels of disclosure and whether the issuer has had any
recent controversies, litigation, or fines related
to racial justice issues.

Percent of Racial Equity Audit Proposals Supported
in 2023
BNY Mellon
Fidelity
Geode
JPMorgan7%Franklin Templeton

21%

ISS
NuveenWellington

Capital Group

36%

9%

15%

93%

57%

0% SUPPORT

0%

LGIM
Northern Trust

Glass Lewis

100% SUPPORTState Street
BlackRockGoldman Sachs
T. Rowe Price
InvescoVanguard

29%

79%

Morgan Stanley

Figure 3: Percent of Racial Equity Audit Proposals Supported in 2023
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: N = 14 proposals voted on at U.S-based S&P 500 companies

100%

AmundiSection 02: Racial Equity Audits

Page 15

Percentage Point Change in Support for Racial Equity Audit Proposals:
2022 vs. 2023
Capital GroupBNY Mellon
BlackRock
Geode

-73%
-56%
-53%
-51%

ISS
InvescoState Street
Wellington
JPMorgan

-43%
-40%
-32%
-27%
-22%

-24%

Glass Lewis
NuveenMorgan Stanley
T. Rowe PriceFranklin Templeton
Northern Trust
LGIM
Amundi
Goldman Sachs
Vanguard
Fidelity

-22%
-16%
-16%
-15%
-7%
-2%
-0%
-0%
-0%
2%

0

25

50

75

100

Percentage of Racial Equity Audit Proposals Supported
Percentage Point Change

Figure 4: Percentage Point Change in Support for Racial Equity Audit Proposals: 2022 vs 2023
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: N = 19 for 2022 and N = 14 for 2023

2022

2023

2022 & 2023

Asset Manager Votes on 2023 Racial Equity Audit Proposals
MO

CMSA AWK

UNH

T

CVX

BAC

WMT

KO

MHK

TRV

EFX

GS

VLO

Amundi
LGIM
Northern TrustMorgan Stanley
Glass Lewis
ISS
NuveenWellington
InvescoFranklin Templeton
State Street
Capital GroupBNY Mellon
Fidelity
Geode
JPMorgan
BlackRockGoldman Sachs
T. Rowe Price
Vanguard
Figure 5: Asset Manager Votes on 2023 Racial Equity Audit Proposals
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: Capital Group does not appear to have holdings in AWK, WMT, or MHK. State Street abstained from voting on the proposal at MHK

Voted Yes

Voted No

N/A

Section 02: Racial Equity Audits

Page 16

Instead of evaluatingthese proposals on
a case-by-case basis,
asset managers should
encourage all portfolio
companies to adopt
racial equity audits as astandard practice.

Instead of evaluating these proposals on acase-by-case basis, asset managers should
encourage all portfolio companies to adopt racial equity audits as a standard practice. The
current case-by-case approach used by asset
managers and proxy advisors misses the markfor three reasons. First, company self-disclosures are not an adequate substitute for ahigh-quality, independent racial equity audit,
since self-disclosures alone can easily serve
the purposes of “equity washing.”70 Second, as
Laura Murphy notes, racial equity audits “neednot always flow from complaints, scandals or
stakeholder pressure.”71 In fact, racial equity audits are most effective as risk mitigation tools
when they are used as a preventative measure
to identify and proactively redress problems
before they erupt into public view and exact
reputational and financial damage. To that

end, an independent audit can shed light on
issues that are simmering under the surface
and negatively affecting firm performance,
but go unreported by impacted stakeholders.72
Third, when racial equity audits are conducted by all companies within an industry, they
serve the dual purpose of identifying disparate
racial impacts that are a) idiosyncratic to aparticular firm, and b) shared across firms andfoundational to how the industry operates.
Indeed, when SEIU Master Trust and CtWInvestment Group filed proposals at eightsystemically important financial institutionsin 2021, they pointed to discriminatory practices entrenched at the industry level, from“‘redlining’ techniques related to mortgage
loans, to excessive checking account fees, tomost recently, [Paycheck] Protection Program
distribution.”73

Section 02: Racial Equity Audits

Page 17

What makes a
racial equity audit?

74

Stakeholder
Engagement

Reviews Products
and Services

Reviews Operations
and Policies

Transparent engagement with diverse stakeholders can help companies avoid litigation,
boycotts, government investigations, andreputational damage related to potential civilrights violations and discrimination.75 Engagement can demonstrate accountability to BIPOC communities, who may be part of thecompany’s labor force and consumer base.

A racial equity audit can generate knowledge
and findings that enable companies to build
products and services that lead to more equitable outcomes, thereby helping companies
expand their business while fostering a more
inclusive and prosperous economy.

An audit should:

 Evaluate the company’s products and ser-Beyond workforce DEI, a comprehensive audit
examines all business operations and policies for potential civil rights or racial equity
impacts. This includes, but is not limited to,operations and policies related to corporate
governance, pay practices, workers rights andhuman capital management, lobbying and political activities, investments and stewardship,
corporate social responsibility, capital allocation, procurement and subcontracting, anddata privacy.

 Engage with stakeholders – including but

not limited to civil rights and racial justicegroups, environmental justice groups, andworkers and consumers of color – to assess and evaluate the company’s impact
on BIPOC communities, including pressing risks and alleged claims of discrimination

Example: After commissioning Laura Mur-phy & Associates to conduct its 2016 civil rights
audit, Airbnb launched Project Lighthouse, an
initiative to uncover and address disparities in
how people of color experience its platform.76
Designed to help Airbnb “innovate and design
new products and initiatives that will increase
acceptance and combat bias,” Project Lighthouse was launched in partnership with civilrights organization Color of Change and with
input from nine other racial justice and technology equity organizations.77

An audit should:
vices for discriminatory impact and bias,
including with respect to user experience,
product design, accessibility, availability,
and affordability

 Evaluate the company’s marketing andadvertising strategies for discrimination
and bias, including algorithmic bias

Example: In 2022, Citigroup commissioned

Covington & Burling LLP to conduct a racial
equity audit of its Action for Racial Equity(ARE) initiative, Citi’s $1 billion commitment
to help address the racial wealth gap.78 The
audit uncovered that ARE had no initiatives
targeting consumer credit scores even though“lower credit scores in Black and other minority communities are a critical driver of the
racial wealth gap.”79 The audit recommended
that Citi focus more on initiatives related tocredit scores and consider additional efforts topromote credit building, credit score improvement, and alternative credit assessments.

An audit should: Assess the company’s operations andpolicies and make recommendations for
how they can be revised to further thegoals of DEI and more effectively combat
racial discrimination and bias

Example: In 2020, Facebook released the results of its civil rights audit, led by Laura Murphy and supported by Meghan Cacace, a partner at Relman Colfax.80 As a result of the audit,
Facebook expanded its voter suppression policy to include threats that voting will result inadverse law enforcement consequences andstatements that encourage coordinated interference in elections. The company also adopted a new policy prohibiting threats of violence
relating to voting, voter registration, or the outcome of elections.

Section 02: Racial Equity Audits

Page 18

The goal of a civil rights audit
is to systematically examine
significant civil rights andracial equity issues that may
exist in a company and todevelop a public plan ofaction to address them in athorough, deliberate, timely,
and transparent manner.”— Laura Murphy

Criteria for a Racial Equity Audit:
A high-quality racial equity audit should:*

Racial Justice Capital
Strategies Table Be conducted by an independent third-  Consult with a wide range of internal andEffective racial equity auditing requires direct
engagement with impacted stakeholders. As
Renaye Manley asserts, “having civil rights
groups, activists groups, [and] community groups as a part of the dialogue with thecompany creates a different level of accountability.”81 In 2023, Majority Action and SEIU
established the Racial Justice Capital Strategies Table (RJCST) along with other leading
racial justice organizations Color of Change,
Hip Hop Caucus, and United for Respect.
RJCST connects organizations that work with
communities of color most impacted by discriminatory corporate behaviors to pathways
for advancing racial equity outcomes in theinvestor ecosystem. As companies continue
to make public commitments to racial justice,formations such as RJCST will help to ensurethat investors are holding issuers to their word.

party auditor with expertise in civil rights
and racial justice Feature active engagement and coop-eration from the company’s executive
management and oversight by the Boardof Directors, including granting the auditor access to necessary information andpeople Go beyond workforce DEI issues to include a comprehensive review of company policies, practices, and products

external stakeholders and be transparent
about which stakeholders were consulted. The company and the auditor shouldmake a clear commitment that any stakeholder who engages in the audit will beprotected from retaliation, intimidation,or disciplinary action

 Identify a clear plan of action and time-line for the company to implement audit
recommendations, and publish a public
report summarizing these findings

 Involve a process of ongoing review, revision, and oversight no less often than every five years, including periodic progress
reports on implementation*Adapted from Laura Murphy’s The Rationale for and Key Elements of a Business
Civil Rights Audit and developed in consultation with Color of Change and SEIU

Section 02: Racial Equity Audits

Page 19

Case Studies
Racial Equity Audit
Proposals at
Travelers
From selling slave insurance policies in the
19th century to refusing to insure properties
in Black neighborhoods in the mid-20th
century, the insurance industry has been a
key architect of systemic racism in the US82
Today, many states prohibit insurers fromexplicitly considering race in the underwritingor pricing of personal lines of insurance.83 Yet,so-called “colorblind” insurance practices thatare based on purportedly objective actuarialassessments continue to have disparate
impacts on BIPOC communities.84
In 2022 and 2023, shareholders led by Trillium
Asset Management filed a racial equity audit
proposal at The Travelers Companies, thesixth largest property/casualty insurancecompany in the US85 In its opposition
statement, Travelers claimed that the proposal
would cause the company to violate state
insurance laws by requiring it to collect racial
demographic information and take race into
account in its underwriting procedures.86
Travelers’ argument misunderstands thenature of systemic racism and the purposeof a racial equity audit, which among otherthings involves identifying and addressing
the unintended outcomes of seemingly raceneutral policies, practices, and products on
BIPOC consumers. As stated by ISS, who
supported the proposal in 2022 and 2023,“Travelers argues that a third-party racial
equity audit would conflict with state law andits own principles not to take race into accountin its underwriting and pricing decisions.
Although the company may not use race asa factor, other factors such as zip codes may
have a similar effect.”87
Consider, for example, the case of auto
insurance.
Travelers’domestic
auto
insurance business wrote $6.48 billion in
net written premiums in 2022.88 Despite theinsurance industry’s insistence that it does
not discriminate based on race, consumer
advocates have long pointed out that
Black drivers pay more in auto insurance
premiums than white drivers, even whencontrolling for driver safety and vehicle type.89

A 2017 ProPublica and Consumer Reports
investigation found that Travelers and otherauto insurers were charging consumers livingin minority zip codes an average of thirty
percent more than consumers living in nonminority zip codes, even though the minority
and non-minority zip codes had similar
accident costs and claims payouts.90
Algorithmic bias91 in insurance underwriting
and rate-setting practices may be partly
responsible for the disparate racial impacts
observed in auto insurance premiums. Whilecar insurers might not explicitly be using race
as a factor for determining premium rates,
many of the factors they do consider could beseen as proxies for race. Auto insurers often
charge higher premiums to those who arerenters, have lower credit scores, work blue
collar jobs, and have less education.92 These
commonly used insurance rating factors
map onto race because they are shaped byhistoric and ongoing practices of redlining,
racial discrimination in mortgage lending,occupational segregation, and educational
racism. For example, the use of creditscores in auto insurance pricing models
disadvantages Black, Native American, andLatino consumers, who are more likely tohave low credit scores or no credit history at
all as a result of systemic barriers to wealthaccumulation and financial stability.93 Scholar
Ruha Benjamin refers to this “subtle but noless hostile form of systemic bias” as the “NewJim Code.”94

it more difficult for low-income Black and
Brown people to make ends meet and build
savings. Prohibitively high insurance costs
mean that Black and Brown drivers are more
likely to drive uninsured and face penalties,
license suspensions, car impoundment, andeven jail time for violating mandatory auto
insurance laws.95 Higher premiums also force
consumers of color to opt for cheaper fly-bynight insurance providers that provide lesscoverage.96
For two years in a row, a significant proportionof shareholders have voted in favor of Travelers
undertaking a racial equity audit that would
investigate and address these types of disparate
racial impacts. In 2022, Trillium’s racial equity
audit proposal received 47 percent supportand had the backing of ten out of eighteen
asset managers. In 2023, the proposal received
35 percent support and had the backing ofseven asset managers. State Street, BNY
Mellon, and Geode supported the proposal
in 2022 but voted against it the following year.
ISS and Glass Lewis supported the proposal
both years, while BlackRock, Fidelity, andVanguard opposed it both years. The Big Fourplus Geode, which manages Fidelity’s entire
passive investment business, held a whopping
43 percent of Travelers common stock going
into the 2023 proxy season. As illustrated by
Figure 6, had any three of these five asset
managers voted in favor of the 2023 proposal,
it could have reached majority support.97

Director
Accountability for
Racial Justice Audits:
Director Election at
The racial equity impacts of disparate auto
insurance pricing are far reaching. Cars are a JPMorgan
lifeline for employment opportunities, andauto insurance is legally required in moststates. High auto insurance premiums makeRacial equity audit proposals, like nearly all
14a-8 shareholder proposals, are non-binding.

REA Proposal at Travelers Could Have Reached
Majority Support with Backing From the Big Four

0%50%
% Support
BlackRock % CSO

State Street % CSO
Fidelity % CSO

100%
Geode % CSO
Vanguard % CSO

Figure 6: 2023 Racial Equity Audit Proposal at Travelers Could Have Reached Majority Support with Backing From the Big Four
Source: Majority Acton analysis of data obtained from Diligent Market Intelligence
Note: Includes Geode, which sub-advises Fidelity’s passive investment funds. Analysis assumes each manager votes all shares that it holds.
A full methodological discussion can be found in Appendix A

Section 02: Racial Equity Audits

Page 20

Investors are uniquely positioned tohold boards responsible when they
fail to exercise the oversight needed
for companies to undertake rigorous
audits that actually help to identify andmanage the risks of systemic racism.
Regardless of whether such a proposal is put
to a vote or settled prior to the annual meeting,issuers ultimately have wide discretion over
how they conduct a racial equity audit, including selection of auditor, the scope of the audit, the nature and process of stakeholder engagement, and whether the company follows
through on the auditor’s recommendations.
For this reason, the success of a racial equity
audit depends on whether there is buy-in fromcompany leadership.98
The Facebook civil rights audit is a salient
example of how the audit process can get
shortchanged when buy-in from company
leadership is lacking. In their 2020 report, auditors Laura Murphy and Megan Cacace notethat although Facebook made significant improvements to its platform in response to theaudit, its approach to civil rights ultimately“remained too reactive and piecemeal.”99 The
auditors state that they “vigorously advocated for more and would have liked to see thecompany go further to address civil rights concerns.”100 At the time of the report’s release in
July 2020, Facebook was embroiled in controversy for deciding to exempt politicians fromits fact-checking program and allowing postsby former President Donald Trump that according to civil rights advocates promoted
hate speech and voter suppression.101
In addition to buy-in from management, a
successful racial equity audit requires board
involvement. Board oversight includes ensuring that the racial equity audit is conducted
properly and that management effectively addresses the issues that are identified by the audit. Investors are uniquely positioned to holdboards responsible when they fail to exercise
the oversight needed for companies to under-

take rigorous audits that actually help to identify and manage the risks of systemic racism.
In 2023, the largest asset managers squandered an opportunity to hold JPMorgan
Chase’s directors accountable for the company’s failure to select a qualified and independent auditor to conduct its racial equity audit.
In 2020, JPMorgan announced a five-year $30
billion commitment towards efforts to close
the racial wealth gap.102 While many financial
institutions made such pledges in the wake ofGeorge Floyd’s murder, JPMorgan’s was by far
the largest.103 Then in 2021, SOC Investment
Group filed a proposal at JPMorgan requestingthat the company “oversee a racial equity audit
analyzing [the company’s] adverse impacts on
nonwhite stakeholders and communities ofcolor.”104 The proposal received forty percent
support, with six of the largest asset managers – including BlackRock–voting in favor, andtwo asset managers–Franklin Templeton andNuveen–recording mixed votes.105 SOC Investment Group re-filed the proposal in 2022, but
withdrew it after JPMorgan agreed to conduct
a third-party racial equity audit.106
In November 2022, JPMorgan released the results of its audit, which was narrowly focusedon its $30 billion commitment.107 The report
was roundly criticized by SOC Investment
Group for failing to live up to the standardsof a quality racial equity audit.108 For one, thereport was authored by JPMorgan rather thanby the third-party auditor. Second, the audit was conducted by JPMorgan’s longtime
financial auditor PriceWaterhouseCoopers(PwC), which has little expertise in civil rights
and racial equity. PwC admits as much in its
third-party attestation examination, statingthat its opinion does not “cover or provide as-

surance on whether or not JPMorgan Chaseis achieving its commitment to advance economic growth and opportunity for Black, Hispanic, and Latino communities” – effectively
undermining the entire exercise of a racial equity audit.109 Perhaps in part due to PwC’s lackof subject-matter expertise, the report wasalso missing key elements of a quality racial
equity audit. Among other things, the scope ofthe report was undefined and incomplete, thereport did not include any auditor’s recommendations, and it did not list which, if any,
stakeholders were consulted.
In light of the racial equity audit’s shortcomings, SOC Investment Group launched a “VoteNo” campaign against audit committee chairman Timothy P. Flynn in 2023. In its exempt
solicitation, the organization argued that JPMorgan’s decision to retain PwC as its financial auditor and racial equity auditor presented
a potential conflict of interest that could havecompromised PwC’s independence.110 Flynn,
they claimed, “bears primary responsibility
for failing to properly apply JPM’s stated policies” related to auditing standards. Ultimately,shareholders re-elected Flynn with 92 percentof the vote. For comparison, support for S&P
500 directors at financial services companies
averaged 96.5 percent in 2023. Of the six asset managers that voted for SOC Investment
Group’s proposal in 2021, four voted to reelectFlynn, effectively excusing JPMorgan for shortchanging the same racial equity audit process
they had supported several years prior. Amundi was the only one of the six original supporters to vote against Flynn’s reelection. Wellington recorded a mixed vote, with 54 percent of
its funds opposing Flynn’s reelection.111

Section 02: Racial Equity Audits

Page 212024 AGM Season

Racial Equity Audit
Proposal at Walmart

Walmart is the largest private sector employer
in the US, as well as the largest private sector employer of Black, Latino, and women in
the country.112 As a low-wage employer withhuge economic power, the company has an
outsized influence in perpetuating racial disparities in labor markets and local economic
development.
Walmart has faced several recent lawsuits andcontroversies alleging discriminatory hiringand promotion practices, pay inequity, andlack of racial diversity in leadership positions.
In 2022, the U.S Equal Employment Opportunity Commission sued Walmart for genderand race discrimination for giving a Black female employee an unsanitary lactation space
based on her race and failing to promote her
based on gender stereotypes about motherswith small children.113 In the summer of 2020,
Walmart’s CEO committed to prioritizing therecruitment and development of its Black
workers – yet the company has received afailing grade from investors on racial and gender pay equity for three straight years.114 Black
employees make up 21 percent of Walmart’s
hourly workforce but only twelve percent ofmanagement and 9.5 percent of officers.115 In
a recent survey of Walmart’s senior leadership,high-ranking Black managers described careeradvancement as difficult and said they would
not recommend working at the company.116
Walmart’s compensation model also disproportionately affects its Black workers, who are

more likely to be in low-wage sales associate
positions. Walmart’s average starting wage($12/hour) is less than the average starting
wage at competitor big-box retailers such as
Amazon and Target ($15/hour).117 Firm-wide
annual employee turnover is around seventy
percent and almost certainly concentrated
among sales associates.118 Walmart’s wages are
so low that its workers are the biggest recipients of Medicaid and SNAP benefits in moststates.119
Walmart also systematically underinvests in
low-income communities of color. The company’s lower prices are often seen as a boon
for households in disadvantaged neighborhoods.120 However, its low prices obscure thenegative impact it has on local labor markets
and economic development. Contrary to thebelief that Walmart is a “job creator,” the entry of Walmart into communities is associatedwith increases in county-wide poverty rates
and large declines in aggregate local employment, earnings, and labor force participation.121
Moreover, one study found that “Poor customer service is unevenly distributed acrossWalmart stores in ways that reproduce racialand socioeconomic disadvantage”— a practicethe researcher calls “consumer redlining” tocapture the company’s systematic neglect ofstores in communities of color.122 This dynamic often results in Walmart closing “unprofitable” stores in communities of color, leaving avoid not easily filled by smaller independent
businesses, many of which are driven out

of business when the retail giant enters theneighborhood.123 For example, in April 2023,
Walmart closed four stores in Chicago, threeof which were located in predominantly Blackand Brown neighborhoods that have longstruggled with grocery and retail access.124 The
closures came after Walmart highlighted its efforts in Chicago as a “critical part” of the $100
million racial equity pledge it made in the aftermath of George Floyd’s murder.125
In 2023, shareholders filed a proposal at
Walmart asking the company to conduct a racial equity audit analyzing its adverse impacts
on BIPOC communities.126 The lead proponent, United for Respect, suggested that theaudit would help mitigate reputational, regulatory, legal, and human capital risks, in addition
to helping Walmart “obtain a complete pictureof how it contributes to, and could help dismantle, social and economic inequality.”127 ISS
and Glass Lewis both supported the proposal,
while State Street was the only one of the Big
Four to support it. The proposal received eighteen percent support among all shareholders
and 42 percent support among independent
shareholders.128
United for Respect has refiled in 2024 due toWalmart’s failure to adequately respond to
the 2023 proposal, which received substantial
support from non-insider independent shareholders. Majority Action recommends thatinvestors vote for this proposal.

Section 03: Director Accountability
for Racial and Ethnic Board Diversity

Page 22

Director
Accountability for
Racial and Ethnic
Board Diversity

03

Section 03: Director Accountability for
Racial and Ethnic Board Diversity

Page 23

Diversity is not only a bottom-line issue affecting
competitiveness and financial performance. It isalso a vitally important social issue. How companies
demonstrate their commitments to diversity have realworld impacts on how underrepresented minorities
are treated in society, especially during a time when
diversity, equity, and inclusion efforts are contracting inreaction to the Supreme Court decision on affirmative
action. We believe board diversity should be a top priorityof every company’s efforts to deliver long-term value toits shareholders and all stakeholders.”— Hyewon Han, Trillium Asset Management
People of color are 41 percent of the UnitedStates population, yet the highest echelonsof corporate America remain overwhelmingly white.129 Lack of racial and ethnic diversity on boards and in executive leadership is areflection of how occupational segregationand labor market discrimination prevent underrepresented racial minority populations
from moving up in corporate institutions.130
Therefore, increasing racial and ethnic board
diversity “is an integral part of the broader effort to eradicate racial bias and discriminationin employment patterns, and thus to respondto inequities in the labor market.”131
Research shows that increases in racial andethnic board diversity lead to increases in racial and ethnic diversity at the managerial andstaff level, suggesting that diversity practices
in the boardroom have a “trickle-down effect”
that help to redress barriers to promotion andadvancement facing people of color in theworkplace.132 Greater racial and ethnic board
representation also leads to better company
performance and corporate governance. A
number of studies have found that companies
with more racial and ethnic board diversity
outperform their peers on financial measures
such as earnings growth and profitability.133
More racial and ethnic diversity across all levels of the workforce, including the boardroom,
also presents business opportunities to develop products and services tailored to BIPOC
communities, who have more than $5 trillion
in buying power and are becoming an in-creasingly larger share of the US population.134
From a governance perspective, more diverse
boards are shown to be less susceptible togroupthink and in-group bias, which havelong dogged board decision making.135 Less
groupthink can in turn translate into morevigorous board oversight and hold executive
leadership accountable.136 BlackRock’s own
stewardship team notes that more board diversity “leads to better long term economic
outcomes for companies” and “contributes tomore robust discussions and more innovativeand resilient decisions.”137
The cultural reckoning following the 2020
murder of George Floyd drew attention to the
exclusion of Black people from corporate leadership ranks and ignited public, corporate, andinvestor interest in racial and ethnic board diversity. Corporations made pledges to increase
the number of people of color, especially Black
directors, on their boards.138 Since then, thenumber of S&P 500 companies with all-whiteboards has steadily declined from 64 in 2020
to just three in 2023,139 while the percentageof new directors who self-identify as people ofcolor has doubled since 2013.140
Despite these strides, the pace of diversification slowed significantly in 2023. Only 36
percent of newly appointed S&P 500 directors
were people of color in 2023, down from forty
six percent in 2022.141 The share of Black directors appointed to new board seats decreased
from 26 percent to fifteen percent, regressing

to levels closer to those seen before George
Floyd’s murder.142 Meanwhile, the share offirst-time S&P 500 directors who self-identify
as people of color decreased from 61 percent
in 2022 to 36 percent in 2023 – including atwenty one percentage point drop for firsttime Black directors and a four percentage
point drop for first-time Latino directors.143
Corporate boards also appear to have cooledon the recruitment of diverse candidates. A
survey of 141 nominating/governance committee chairs at S&P 500 companies revealed
that only twenty percent are currently prioritizing recruiting women and people of color
for director seats.144 Moreover, even after being
appointed to boards, Black directors remain
locked out of influential leadership positions:
In 2022, only fourteen out of the 474 Black directors in the S&P 500 served as board chairsor lead directors.145
As a result, US corporate boardrooms still do
not resemble the racial and ethnic makeup of
the country. As illustrated in Figure 7, over 350
companies in the S&P 500 have less than thirty percent racial and ethnic representation on
their boards. According to Deloitte’s Missing
Pieces report, at the current pace of change,“there is no period where the total proportionof board seats held in the Fortune 500 by individuals from underrepresented racial and ethnic groups reaches population parity throughat least 2060.”146
The corporate backsliding on board diversity

Section 03: Director Accountability for
Racial and Ethnic Board Diversity

Page 24

ant than ever that asset managers wield their
proxy voting power to push companies to recommit to diversity goals.

Racial and Ethnic Board Diversity at S&P 500
Companies in 2023

~40% of the US
population is
racially diverse

158

180

160

145

140

104

Number of Comapnies

120

100

80

60

52

35

40

6

20

0
0–10%

10–20%

20–30%

30–40%

40–50%

50+%

Percent of BIPOC Directors on Board
Figure 7: Racial and Ethnic Board Diversity at S&P 500 Companies in 2023
Source: Majority Action analysis of data obtained from ISS ESG

The successful corporate gender diversity
campaigns of the late 2010s provide a blueprint for how asset managers – particularly the
Big Four – can use their large public company
holdings and proxy voting power to effectuate broad-based changes to racial and ethnic
board composition. Beginning in 2017 on theheels of the #MeToo movement, State Street,BlackRock, and Vanguard applied concertedpressure on public companies to add more
women directors to their boards. They did soby adopting and enforcing proxy voting policies of voting against directors at companies
failing to make progress on board gender diversity. Both State Street and BlackRock defineda minimum diversity expectation, with State
Street focusing on companies with no women
directors and BlackRock focusing on companies with fewer than two. Researchers foundthat the three asset managers’ gender diversity campaigns led to a 2.5-fold increase in thenumber of women directors on US corporateboards between 2016 and 2019.150 They also
found that at companies targeted by the three
asset managers, women directors were more
likely to assume leadership positions such as
chair of the nominating committee, where
they could more effectively manage the board
pipeline and drive governance changes.151 The
gains shepherded by State Street, BlackRock,and Vanguard’s gender diversity campaigns
illustrate the impact that asset managers canhave when they set minimum diversity expectations and use director votes to hold boards
accountable to those expectations.

can be attributed to several factors, including
low board turnover and fewer opportunities
for board refreshment;147 the overturning ofAB 979, California’s board diversity law;148 andcorporate retrenchment on DEI in the wakeof potential litigation challenges following theSupreme Court decision in Students for Fair
Admissions v. President and Fellows of Harvard College.149 In this environment of corporate hesitance and retreat, it is more import-

Most asset managers’ proxy voting policies
acknowledge the importance of racial andethnic board diversity, and many support
shareholder proposals on board diversity disclosure. However, their policies are less robust
when it comes to director accountability. Figure 8 summarizes asset managers’ and proxyadvisors’ 2023 proxy voting policies on director votes related to racial and ethnic board
diversity (see Appendix F to see the actual
language used in each asset manager’s proxyvoting policies). Four insights emerge:

1. Six out of eighteen asset managers do not 4. Four asset managers plus ISS provide
articulate any minimum diversity expectation related to race and ethnicity.

2. The ten asset managers and two proxyadvisors that do commit to a minimum
diversity expectation are satisfied if companies have just one director of color on
their boards. Given that the average S&P
500 board contains eleven members, thissets the floor at merely nine percent racialand ethnic representation.152

3. Two asset managers–BlackRock andCapital Group – articulate a minimum diversity expectation but do not specify any
accountability consequences.

all-white boards a grace period before enacting voting sanctions. For example, JPMorgan might not oppose the nominating
committee chair of an all-white board ifthere are “mitigating factors” like the “recent retirement of relevant directors.”153
Morgan Stanley may not vote against thenominating committee chair of an allwhite board if the company has a “credible diversity strategy.”154 ISS makes an exception “if there was racial and/or ethnic
diversity on the board at the preceding
annual meeting and the board makes afirm commitment to appoint at least one
racial and/or ethnic diverse member within a year.”155

While most asset managers’ proxy voting
policies allow for the possibility of using
director elections to hold boards accountable to racial and ethnic diversity goals,
only some asset managers actually deploy
this lever. This is evidenced by how asset
managers voted in director elections at thethree S&P 500 companies that ran slates of
all-white director nominees — Caesars Entertainment, Inc., Chubb Ltd., and Dover Corporation.156
Figure 9 examines how asset managers voted in director elections involving members of
the nominating and governance committees
at Caesars, Chubb, and Dover. Shareholder support for the nominating committee
members at these three companies was notably low, ranging between 73 to 89 percent.
For comparison, support for directors acrossthe entire S&P 500 averaged 96 percent in
2023.157 However, among the eighteen largest asset managers, only two — Nuveen
and Goldman Sachs — voted against allseven nominating committee members
at all three companies. Although its proxyvoting policy is sparse on racial and ethnic
board diversity, Nuveen explicitly cited “Board
Quality – Diversity” in its vote rationale for allseven directors.158 Goldman Sachs voted in accordance with its proxy voting policy, which
explicitly states that it will withhold its voteor vote against nominating committee members at S&P 500 companies where “the board
does not have at least one diverse director
from a minority ethnic group.”159 Seven asset
managers, including two of the Big Four
— BlackRock and Vanguard — voted to reelect all nominating committee members
across all three companies. State Street andFidelity voted against some or all of the nominating committee members at Caesars, but
voted in favor of all the nominating committee
members at Chubb and Dover.
Of the three companies with all-white boards,
Caesars was the only one where the chair of
the nominating committee, Frank J. Fahrenkopf, Jr., was up for reelection. Caesars was also
the only company where the entire nominating committee was white and male. Ten outof eighteen asset managers voted against
re-electing Fahrenkopf, who saw his support plummet from 98 percent in 2022 tojust 76 percent in 2023. Glass Lewis, BNY
Mellon, Vanguard, and JPMorgan supported Fahrenkopf’s reelection despite their
proxy voting policies stating they may oppose the nominating committee chair if
the board has no racial or ethnic diversity.

Section 03: Director Accountability for
Racial and Ethnic Board Diversity

Page 25

The board composition issues at Caesars,
Chubb, and Dover point to the need for asset managers to raise their standards for theminimum level of racial and ethnic board diversity. All three companies had one director
of color on their boards the previous year. At
Caesars, the sole director of color resigned
eleven months before the annual meeting toassume another position.160 At each of Chubb
and Dover, two directors, including the sole director of color, retired at the conclusion of the2023 annual meeting, leaving two board seatsvacant.161 None of the three companies nominated a racially or ethnically diverse candidate
to replace the departing director(s), choosing to instead run slates of all-white director
nominees. 96 S&P 500 boards currently have
only one director of color, meaning that theseboards – like Caesars, Chubb, and Dover – arejust one resignation or retirement away frompotentially becoming all-white.162– and that many provide grace periods before
activating director accountability measures –does little to incentivize boards to build andmaintain robust pipelines for recruiting diverse candidates. Furthermore, research suggests that there needs to be a critical massof racially and ethnically diverse directors
in order for the “diversity benefit” to be realized and to actually influence corporate decision-making.163 Indeed, 228 of the 400 S&P
500 companies with two or more directors ofcolor still have less than thirty percent racialand ethnic board representation.164 To that
end, asset managers must articulate and enforce diversity standards that actually lift thefloor and trigger meaningful changes in how
boards operate and govern. Majority Action
recommends that asset managers increase
the minimum racial and ethnic diversity
expectation for US companies to thirty
percent with the eventual goal of bringing
corporate boardrooms into parity with thediversity of the US population.

The fact that asset managers expect portfolio
companies to have just one director of color

Summary of Asset Managers’ and Proxy Advisors’ 2023
Proxy Voting Policies: Board Accountability for Racialand Ethnic Diversity
165

May oppose certain directors, including chair and members of thenominating commitee,166 if company has no directors of color

Goldman Sachs
LGIM
Fidelity

May oppose chair of nominating committee if company does not haveat least one director of color or board is lacking sufficient racial or ethnic
diversity

State Street
Glass Lewis
BNY Mellon

May oppose chair of nominating committee if board has no racial and ethnic
diversity, but makes exceptions for certain cases, such as when relevant
directors have retired, director search is ongoing, company has a credible
diversity strategy, company commits to appointing a diverse director within
one year, etc

Morgan Stanley
Wellington
ISS
JPMorgan
Vanguard

Articulates expectation that company have at least one racially diverse
director, but does not mention applying voting sanctions

BlackRock
Capital Group

Does not articulate a minimum expectation on racial or ethnic board
diversity. Acknowledges the importance of board diversity with respect torace alongside other markers such as gender, age, skills, background, etc.
May vote against chair or members of nominating committee if there areconcerns about board diversity more generally

Nuveen
Northern Trust
T. Rowe Price
InvescoAmundiNo mention of racial or ethnic diversity

Geode

Figure 8: Summary of Asset Managers’ and Proxy Advisors’ 2023 Proxy Voting Policies: Board Accountability for Racial and Ethnic
Diversity
Note: See Appendix E for actual language excerpted from 2023 proxy voting policies

Section 03: Director Accountability for
Racial and Ethnic Board Diversity

Page 26

Asset Manager Votes at Companies That Ran All-White Director Nominee Slates

DIRECTORNOMINEES 1OVERALL
SHAREHOLDERSUPPORTCHUBB LIMITEDCAESARS ENTERTAINMENTCOMPANY

DOVER CORPORATIONFrank J.
Fahrenkopf *Don R.
KornsteinDavid P.
TomickFrances F.
Townsend

Michael P.
Connors

Kristine C.
GrahamMichael F.
Johnston

76%

84%

88%

76%

73%

89%

89%

Goldman Sachs
NuveenAmundi
LGIM
FidelityFranklin Templeton
Morgan Stanley
Northern Trust
State Street
Wellington
ISS
Capital Group
BlackRockBNY Mellon
Geode
Invesco
JPMorgan
T. Rowe Price
Vanguard
Glass Lewis

Voted No

Mixed Vote

Voted Yes

N/A

Figure 9: Asset Managers Votes at Companies That Ran All-White Director Nominee Slates
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: Geode did not vote in the director elections for Frances Townsend or Michael Connors. State Street voted to abstain in the director election for Michael Connors. Chubb does not include
nonvotes or abstentions in the vote count for director elections. Capital Group does not appear to have any holdings in Dover Corporation
1
Only includes director nominees who are members of the Nominating and Governance Committees* Denotes a director nominee who serves as Chair of the Nominating and Governance Committee

Section 03: Director Accountability for
Racial and Ethnic Board Diversity

Page 272024 AGM Season

Vanguard Backtracks on
Diversity Commitments

Vanguard notably weakened
its language on director
accountability for racial andethnic board diversity in its
2024 proxy voting policies,
effective February 2024

Majority Action’s comparison of Vanguard’s 2023167 and 2024168 policies finds the following: Vanguard’s 2024 policy continues to articulate a minimum diver-sity expectation (“A board should also, at a minimum, represent
diversity of personal characteristics, inclusive of at least diversity
in gender, race, and ethnicity on the board”), but this expectation
is no longer in the section titled “Escalation process: Director andcommittee accountability.” Vanguard’s 2023 policy stated that it will generally vote against
the nominating committee chair if a company’s board is “making
insufficient progress in its diversity composition.” Its 2024 policy
removes explicit reference to diversity and instead says that Vanguard will oppose the nominating committee chair if the board
is “not taking action to achieve board composition that is appropriately representative, relative to their markets and the needs oftheir long term strategies.” Vanguard’s 2024 policy deletes the detailed discussion of board
diversity disclosure included in its 2023 policy.

 Vanguard’s 2024 policy no longer considers insufficient board
diversity disclosure to be grounds for opposing the nominating
committee chair.

These changes are especially concerning given Vanguard’s alreadyhigh support for all-white boards in 2023.
For more information, including a redline comparison of key passages and suggested questions for clients, see Majority Action’s memo,
Vanguard’s 2024 Proxy Voting Guidelines: A Step Backwards on Board
Diversity?, available at the Majority Action website.

Section 04: Corporate Political Transparency

Page 28

Corporate
Political
Transparency

04

Section 04: Corporate Political Transparency

Page 29

Investors and the public have a right toknow when companies say one thingin public but do another behind closed
doors with their lobbying and politicalspending. A lack of lobbying andpolitical spending transparency creates
reputational risks that can seriously
jeopardize investors’ funds.”— Jon Golinger, Public Citizen
Corporations have captured the US politicalsystem, undermining democracy and halting
progress towards racial equity. Through theirelectoral spending, corporations have systematically depressed the political power of
BIPOC populations and have pushed policy
priorities that target and exploit communities of color. Due to systemic racial inequities,
people of color are underrepresented in thecorporate donor class, whose large contributions play a decisive role in the fate of political campaigns and in the setting of nationaland state policy agendas.169 Since the Citizens
United decision, corporate money has flooded state legislative races, resulting in racial
gerrymandering, restrictions on voting rights,
and minority rule in states across the country.170 Corporate lobbyists have exacerbated
racial inequities by blocking environmental
and consumer protection regulations, defeating attempts to raise the minimum wage, andpassing laws curtailing people’s right to organize and protest.171 In short, unbridled corporate influence in politics takes democracy outof the hands of everyday people and allows asmall group of mostly white corporate actors
to use government to further consolidate andentrench their wealth and power.
Moreover, corporations’ political agendas often contradict and undermine the public-facing statements they make on issues such as
racial justice, democracy, and human rights.
Following the 2020 murder of George Floyd,

corporations made statements condemning
racial injustice to align themselves with thepolitical moment.172 Yet in 2022, those same
corporations funneled millions of dollars tostate legislative candidates who have voted
to restrict voting rights, criminalize abortion,and ban discussions of race in public education.173 Likewise, after the January 6th insurrection at the US Capitol, companies pledged tohalt contributions to election objectors in thename of upholding democracy. Yet these companies resumed their political contributions insubsequent election cycles — and their corporate lobbyists never stopped donating toelection objectors even when the company
bans were in place.174
Corporations are emboldened to act with such
impunity in part because they are not required
to provide comprehensive disclosure of theirpolitical spending and lobbying activities. The
current disclosure regime allows companies toshroud their political spending in secrecy andduck accountability by contributing moneyfrom corporate treasury funds to third-party
political groups like trade associations, 527s,
and 501(c)4s. While corporations are subject
to federal lobbying requirements, their lobbying activities at the state and local level areoften obscured from view because of the inadequacies of and disparities in state and local
disclosure laws.175 Furthermore, current federal
lobbying disclosure rules do not require corporations to disclose their lobbying positions,making it difficult to ascertain whether a company is lobbying in ways that are inconsistent
with its public statements and commitments.
In addition to eroding democracy and exacerbating racial inequities, corporate influence onelections and public policy poses risks to companies and to the investors who hold shares inthose companies. It is well documented thatcompanies expose themselves to reputational, financial, and operational risk when they
engage in political spending and when theirpolitical and lobbying activities do not alignwith their stated values.176 As noted in a recent
Fortune article, corporations that donated toelection objectors in 2022 incurred reputational costs due to backlash from customers
and employees.177 Unchecked corporate political influence178 also poses risks to the longterm portfolios of diversified investors. While
political rent-seeking in the form of election
spending or lobbying may help one company,
it can cause externalities for other companies,
taxpayers, consumers, and workers — which
ultimately hampers economic value creationand portfolio growth upon which long-term
diversified investors depend.179 Lack of corporate political transparency also means thateveryday investors are kept in the dark about
the electoral and policy campaigns they areindirectly funding, which may not be alignedwith their interests or values.

Section 04: Corporate Political Transparency

Page 30

Percent of Political Spending & Lobbying Disclosure
Proposals Supported in 2023
Morgan Stanley

75%

Capital Group

5%

BlackRock

12%0% SUPPORT
17%
Fidelity
8%
Goldman Sachs

State Street

26%Franklin Templeton

80%

Geode
JPMorgan

BNY Mellon

44%

64%

ISS

92%

100% SUPPORT

76%

52%

100%

Amundi
LGIM
Northern Trust

Glass Lewis
InvescoNuveenWellington

T. Rowe Price

4%

Vanguard
Figure 10: Percent of political spending & lobbying disclosure proposals supported in 2023
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: N=25 proposals filed at US-based S&P 500 companies

Twenty-five political spending and lobbying disclosure proposals were put to a votein 2023. Three asset managers — LGIM,
Amundi, and Northern Trust — voted forall proposals, while four others — Nuveen,
Invesco, Morgan Stanley, and Franklin
Templeton — voted for 75 percent or moreof the proposals. The Big Four, along with
Capital Group, Goldman Sachs, and T.
Rowe Price, were the asset managers withthe worst voting records. Their voting behavior deviated sharply from the recommendations of both ISS and Glass Lewis,
which endorsed 92 and 76 percent of all
proposals, respectively.
With the exception of Vanguard, the Big
Four were more supportive of politicalspending disclosure proposals than lobbying disclosure proposals. Of the six politicalspending disclosure proposals put to a votein 2023, Fidelity supported 67 percent, State
Street supported sixty percent, BlackRocksupported 33 percent, and Vanguard supported none.180 In comparison, of the nineteen
lobbying disclosure proposals put to a vote,Fidelity supported none, State Street supported seventeen percent, and BlackRock andVanguard each supported five percent. All four
asset managers voted against the lobbying disclosure proposal filed at McDonald’s, which
was the only disclosure proposal to achieve
majority support in 2023.181 The Big Four’s lackof support for lobbying disclosure proposals isparticularly glaring given the gaps and deficiencies in state lobbying disclosure requirements;
98 percent of S&P 500 companies do not disclose how much they spend on lobbying at thestate level, which is increasingly where consequential policy decisions are being made.182

In addition to political disclosure proposals,
shareholders voted on thirteen “political congruency” proposals in 2023.183 These proposals call on companies to identify and explain
misalignments between their political spending and lobbying activities and their statedcorporate values and commitments on issues
such as diversity, inclusion, climate change,and healthcare access. The leaders on political and lobbying disclosure — LGIM,
Amundi, Northern Trust and to a lesser
extent Morgan Stanley — were also leaderson political congruency. Meanwhile, eightasset managers voted against all thirteen
political congruency proposals. The proxyadvisors diverged sharply on this set of
proposals, with ISS recommending 77 percent and Glass Lewis recommending justfifteen percent.
Asset managers backtracked in a major
way on political congruency in 2023, as illustrated by Figure 12. Capital Group wentfrom supporting 82 percent of such proposals in 2022 to none in 2023. The next
largest backsliders were T. Rowe Price,
JPMorgan, and Invesco, whose support
decreased by more than forty percentage
points. This backsliding is especially concerning given extensive reporting that came out at
the end of 2022 revealing that corporations
had contributed more than $61 million to election objectors in the midterm cycle.184

Percent of Political Congruency Proposals Supported
in 2023
NuveenT. Rowe Price

8%

BNY Mellon
Glass Lewis
Wellington
Franklin Templeton
Invesco

15%

23%

38%

Morgan Stanley

69%

0% SUPPORT0%BlackRock
Capital Group
Fidelity
Goldman Sachs

JPMorgan
State
StreetVanguard

Northern Trust

92%

100% SUPPORT

31%

Geode

Figure 11: Percent of political congruency proposals supported in 2023
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: N=13 proposals filed at US-based S&P 500 companies

77%
ISS

100%

AmundiLGIMSection 04: Corporate Political Transparency

Page 31

Percentage Point Change in Support for Political Congruency Proposals:
2022 vs. 2023
-82%

Capital Group-47%

T. Rowe Price-45%

JPMorgan-43%

Invesco-33%

Goldman Sachs-31%

Franklin Templeton-29%

NuveenState Street

-27%

ISS

-23%
-15%

Geode

-13%

Morgan Stanley
BNY Mellon-12%

Glass Lewis

-12%
-8%

Northern Trust-3%

Wellington
Amundi

0%

LGIM

0%

Vanguard

0%BlackRock0%

Fidelity

0%

0

25

50

75

100

Percentage of Political Congruency Proposals Supported
Figure 12: Percentage Point Change in Support for Political Congruency Proposals: 2022 vs. 2023
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: N = 19 for 2022 and N = 14 for 2023

Percentage Point Change
2022

2023

2022 & 2023

Section 04: Corporate Political Transparency

Page 32

Case Studies

tribute to the disproportionate financial costs
borne by Black and Latino households, whoare 1.9 and 1.4 times more likely to overdrafton their checking accounts than white households.198

Lobbying Disclosure
Proposal at Eli Lilly

Wells Fargo is also a sponsor of the State Financial Officers Foundation (SFOF), an American Legislative Exchange Council-affiliatedgroup that is at the forefront of state level attacks on ESG investment policies.199 SFOF haspressured major asset managers – includingBlackRock and State Street – to excise considerations of racial equity and carbon emissions
reductions from their investment strategies,
despite the fact that such strategies are criticalto ensuring long-term value creation for diversified investors.200

The pharmaceutical giant Eli Lilly is a cautionary tale for how corporate lobbying canentrench and exacerbate racial inequities.
Eli Lilly spent millions of dollars in 2023 lobbying against bills that aimed to reduce prescription drug prices.185 The company’s CEO is on
the board of the Pharmaceutical Research andManufacturers of America (PhRMA), a powerful trade group that spent $29.2 million tolobby Congress and federal agencies in 2022.186
PhRMA sued to invalidate the provision in the
Inflation Reduction Act that allows Medicare
to negotiate lower prescription drug prices.187
High drug prices perpetuate racial and ethnic
health inequities.188 According to the Department of Health and Human Services, “Among
adults 65 and older, Black Medicare beneficiaries were roughly 1.5 times as likely as White
beneficiaries to have trouble affording medications, and about two times as likely to not fillneeded prescriptions due to cost.”189
On the state level, Eli Lilly has lobbied against
legislation to cap the price of insulin, thecompany’s biggest revenue generator. Eli Lilly
lobbyists have strong-armed state lawmakers
into accepting a suboptimal policy solution –copay caps for people with private insurance
only – that allows the company to reap highprofit margins while offering no relief to patients on federal health plans like Medicare.190
Eli Lilly’s efforts to obstruct and weaken legislation seeking to lower the price of insulin
disproportionately harm communities of color, who as a result of structural inequities are
more likely to have diabetes, be uninsured orunderinsured, and face economic barriers toaccessing insulin.191
SEIU filed a lobbying disclosure proposal at Eli

Lilly in 2021, 2022, and 2023. They noted that
Eli Lilly did not adequately disclose its state
lobbying activities, its membership in trade associations that engage in lobbying, or its membership in tax-exempt organizations that writeand endorse model legislation.192 The proposal
received 48 percent support in 2021, 37 percent
support in 2022, and 31 percent support in
2023. BlackRock, Vanguard, and State Street
voted against the proposal all three years, deviating from the recommendations of ISS andGlass Lewis. Fidelity voted for the proposal in
2021, but voted against it in 2022 and 2023.

Political Congruency
Proposal at Wells
Fargo
Wells Fargo is a prime example of a corporation with far-reaching economic power whose
political spending and lobbying activities belie
its public pronouncements on racial equity. In
2020, Wells Fargo, along with several other corporations, issued a joint statement committing
to “investing in substantive change in our organizations and the communities we serve toaddress racial inequities and social justice.”193
Yet the bank has a long and ongoing history of
discriminatory and exploitative business practices targeting Black borrowers.194 Throughits trade associations, the Consumer Bankers
Association (CBA) and American Bankers
Association (ABA), Wells Fargo has lobbied
against consumer regulation related to predatory “junk fees,” which disproportionately
target working class people of color.195 In thefirst three quarters of 2023, the CBA and ABAspent $2.7 million and $6.4 million, respectively, to oppose legislation seeking to crack down
on exploitative overdraft fees.196 In 2022, Wells
Fargo generated more revenue from overdraft/
non-sufficient fund fees – $1.3 billion – thanany other bank.197 These types of fees con-

Like many companies, Wells Fargo’s corporate
political action committee (PAC) paused allpolitical donations following the January 6th,2021 insurrection. Wells Fargo subsequently
announced that its PAC strategy would “takeinto consideration the actions of elected officials who objected to the Electoral College,”and pointed to the policy shift as a reflectionof the company’s respect for the nation’s laws
and commitment to fostering diversity, equity,and inclusion.201 Yet a leaked internal “Transparency Report” detailing Wells Fargo’s political spending in 2021 and the first quarter of2022 did not include consideration of whether
the candidate denied the 2020 election results
among the company PAC’s “contribution criteria.”202 In 2022, Wells Fargo gave $158,000
to members of Congress who voted against
the certification of the 2020 election.203 Since
2019, Wells Fargo has contributed at least$252,250 to the Republican Governors Association (RGA), $100,694 to the Republican State
Leadership Committee (RSLC), and $50,285
to the Republican Attorneys General Association (RAGA).204 RGA, RAGA, and RSLC are
partisan political groups that have contributed to candidates for state political office whohave denied the 2020 election results and who
have supported legislation undermining voting laws, eliminating affirmative action, anderasing Black history from public education
curricula.205
In 2023, shareholders filed a political congruency proposal at Wells Fargo, noting the aforementioned myriad misalignments between its
public statements and political activities. The
proposal received 29 percent support, with thefour largest asset managers voting against it.

Section 04: Corporate Political Transparency

The Big Four’s
Voting Influence
The Big Four asset managers voted against
both the lobbying disclosure proposal at Eli
Lilly and the political congruency proposal at
Wells Fargo. Going into the 2023 proxy season, the Big Four collectively held 25 percentof common stock in Eli Lilly and thirty percent in Wells Fargo. As illustrated by Figure
13, given their substantial holdings, their decision to vote against greater corporate politicaltransparency played a pivotal role in defeatingthese proposals.

Page 33

Corporate Political Transparency Proposals at Eli
Lilly and Wells Fargo Could Have Reached Majority
Support with Backing from the Big Four

ELI LILLYWELLS FARGO

0%

50%

100%

% Support

State Street % CSO

Fidelity % CSO

Geode % CSOBlackRock % CSO

Vanguard % CSO

Figure 13: Corporate Political Transparency Proposals at Eli Lilly and Wells Fargo Could Have Reached Majority Support with
Backing from the Big Four
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: Includes Geode, which sub-advises Fidelity’s passive investment funds. Analysis assumes each manager votes all sharesthat it holds. A full methodological discussion can be found in Appendix A

Section 05: Freedom of Association& Collective Bargaining

Page 34

Freedom of
Association& Collective
Bargaining05Section 05: Freedom of Association& Collective Bargaining

Page 35

Poor labor practices can erode shareholder value
through reputational damage and legal risks. As longterm investors, we insist that responsible employers
uphold the fundamental labor rights of their workers.
Non-interference with union organizing and good faithcollective bargaining should be a basic standard forgood business conduct at…all companies.”
206— New York City Comptroller Brad Lander
Freedom of association and collective bargaining play a critical role in the movement for racial equity. Labor unions help to reduce centuries of entrenched racial disparities in wages,
healthcare access, and economic security. Research shows that Black and Latino workers
get a larger boost in wages from unionization— thirteen percent and nineteen percent, respectively — than their white counterparts.207
Compared to Black non-union workers, Black
union workers are eighteen percentage points
more likely to have employer-sponsored insurance and nineteen percentage points more
likely to have an employer-sponsored retirement plan.208 Freedom of association is especially important for workers doubly-burdenedby racial discrimination and occupational segregation, because it is what the International
Labour Organization calls an “enabling right”
that unlocks other workplace rights.209 Thisis evidenced by the campaign at the federal
service contractor Maximus, where Black and
Latina workers have exposed racial inequities
in hiring and promotions practices in the process of organizing to form a union.2102023 was a historic year for US workers, whostaged hundreds of strikes211 and won impressive bargaining victories at some of thenation’s largest corporations.212 The post-pandemic era has also unleashed a wave of newworkplace organizing; the National Labor
Relations Board (NLRB) saw the numberof union election petitions increase by 58
percent between 2021 and 2023.213 Yet these
unionization campaigns have frequently been
frustrated by allegations of employer interference, coercion, and retaliation.214 According to
one study, employers are charged with violating federal law in forty two percent of union
election campaigns.215 Employer interference
acutely impacts workers of color, who are
overrepresented in low-wage industries (suchas retail and service) and geographies (suchas the American South) where many of these

new unionization efforts are taking hold.
In this climate of heightened worker mobilization, shareholders are filing resolutions callingon corporations to respect workers’ rights tofreedom of association and collective bargaining. At a time when US public support forunions is at an all-time high, companies perceived to be interfering with union campaigns
face reputational risks and costs.216 Unions
also improve employee retention and decrease
turnover, enabling companies to weather economic shocks and maintain operational stability during tight labor markets, such as the years
following the COVID-19 lockdown.217 Studies
have found that union density and collective
bargaining agreements lead to greater productivity by giving workers a voice and establishing a system of workplace governance where
the employer and employees are mutually
responsible for firm performance.218 For asset
managers, supporting the right of workers toorganize is aligned with enhancing long-term
shareholder value.219 Given the role that unions
play in closing the racial wealth gap, address-

ing fundamental labor rights in stewardship is
one way for investors to mitigate the systemicrisks of racialized inequality.220
In the 2023 proxy season, seven freedom of
association proposals were put to a vote atcompanies such as Amazon, Wells Fargo,
and Delta Airlines.221 With the exception of
the Starbucks proposal – discussed in greater detail in the next section – these proposals asked companies to commit to a policy of
non-interference when employees exercise
their right to form or join a trade union, andto engage in good faith and timely collective
bargaining. Of the eighteen largest asset
managers, LGIM and Morgan Stanley were
the only ones to vote for all seven proposals. The proxy advisors were also largely
supportive – Glass Lewis recommended
voting for all seven proposals, while ISS
recommended voting for all but one. Meanwhile, six asset managers — including twoof the Big Four, BlackRock and Vanguard— voted against all seven freedom of association proposals.

Percent of Freedom of Association Proposals
Amundi
Supported in 2023 Franklin Templeton
Northern Trust
Geode
Nuveen

BNY Mellon

14%

43%

Invesco57%

0% SUPPORT0%BlackRock
Capital Group
Goldman Sachs
JPMorgan
T. Rowe Price
VanguardISS

86%
100% SUPPORT

29%

Fidelity
State Street

71%

Wellington

Figure 14: Percent of Freedom of Association Proposals Supported in 2023
Source: Majority Action analysis of data obtained from Diligent Market Intelligence
Note: N = 7 proposals filed at US-based S&P 500 companies

100%

LGIM
Glass Lewis
Morgan Stanley

Section 05: Freedom of Association& Collective Bargaining

Page 362024 AGM Season

Proxy Contest at Starbucks

Past and upcoming actions at Starbucks show
how investors can chart a path of escalationfrom informal engagement, to shareholder resolutions, to director elections when corporations are perceived as failing to mitigate risk,
respond to investor concerns, and prioritize
long-term company health and shareholder
value.
Starbucks workers began organizing to forma union in 2021, citing concerns around shortstaffing, unpredictable scheduling, and low
wages, among other issues.222 Since then, 381
stores covering 9,446 workers have voted tounionize.223 The Starbucks union campaign
has been rankled with allegations of employer interference. As of February 2024, NLRB
administrative judges have issued 48 rulings
against Starbucks, including illegally threatening and firing union organizers and interfering with the agency’s investigation process.224
A September 2023 decision found that thecompany had violated federal labor law on anationwide scale when it withheld pay andbenefit raises from workers in union stores.225
In its 2021 Form 10-K filed with the Securities
and Exchange Commission (SEC), Starbucks
acknowledged the reputational risks associated with its handling of the union campaign,
noting that “our responses to any union organizing efforts could negatively impact how ourbrand is perceived and have adverse effects
on our business, including on our financial
results.”226
In March 2022, a group of more than seventy
investors sent Starbucks a letter urging it toadopt a policy of neutrality, to which the company did not agree.227 The next year, a coalitionof shareholders filed a proposal at Starbucks
requesting that the board of directors issue
a third-party assessment of the company’s
compliance with its stated commitments tofreedom of association and collective bargaining. Fidelity and State Street voted for the
proposal, while BlackRock and Vanguard opposed it. In its vote rationale, Vanguard statedthat although recent NLRB rulings and thecompany actions they referenced “represented
evidence of materialized legal risks,” it would
vote against the proposal, citing “detailed mitigation steps [the board and company management] had taken to oversee risks related toworkers’ rights.”228 Despite having the backingof only two of the Big Four, the shareholder
proposal reached majority support with fifty
two percent of the vote.229
In December 2023, Starbucks released an
abridged version of the third-party assessment, which found among other things thatthe company was not prepared for the emergence of union activity and had made missteps due to lack of strong and clear governance.230 Proponents of the 2023 shareholder
proposal have stated that the assessment
raises concerns about board oversight andaccountability, especially because the assessment did not appear to include worker input.231
The Strategic Organizing Center (SOC),
a coalition of unions including SEIU, hassince nominated a slate of three director
candidates for election at Starbucks’ 2024
annual meeting.

Asset Manager Votes on
Freedom of Association
Proposal at Starbucks
LGIM
Northern TrustMorgan Stanley
Glass Lewis
ISS
NuveenWellington
InvescoFidelity
State Street
Capital GroupBNY Mellon
Franklin Templeton
Geode
JPMorgan
BlackRockGoldman Sachs
T. Rowe Price
Vanguard

✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✗
✗
✗
✗
✗
✗
✗
✗
✗

Figure 15: Asset Manager Votes on Freedom of Association
Proposal at Starbucks
Source: Majority Action analysis of data obtained from Diligent
Market Intelligence.

Section 06: Recommendations

Page 37

Recommendations

06

Section 06: Recommendations

Page 38

Recommendations for AssetManagers and Investors

Additional Recommendations
for Asset Owners

Given the company-specific and portfolio-wide significance of raciallyinequitable corporate practices on long-term shareholder value, asset
managers should review and update their stewardship and proxy voting policies to incorporate a comprehensive racial equity lens. This includes establishing the reduction of racial inequities as a goal of their
proxy voting policies, consistent with their fiduciary duty to manage
systemic risks.

In addition to adopting the recommendations for investors, asset
owners should demand accountability from their asset managers:

1.
2.
3.
4.
5.
6.
7.

Acknowledge that racial inequity is a systemic risk which negatively impacts value at individual companies and across portfolios.
Acknowledge that a wide range of proxy voting categories canresult in positive or negative racial equity impacts, and indicate(a) which proxy voting policies have been reviewed for racial
equity impacts, and (b) the process for ongoing review.
Adopt a default position of generally supporting proposals to
conduct comprehensive independent racial equity audits, unless the company has: (a) already conducted such an audit thatmeets best-practice standards within the last five years, and (b)established a governance mechanism for ongoing oversight ofracial equity across their products, practices, and policies.
Set a minimum expectation of at least thirty percent racial andethnic diversity on US S&P 500 boards and require companies
to publish board diversity disclosures that include directors’ racial and ethnic identities. Enforce voting sanctions against relevant committee and/or board leadership at companies failingto meet these standards. Set a medium-term target for US S&P
500 boards to achieve parity with the US racially and ethnicallydiverse population (currently forty one percent and rising).
Adopt a default position of generally supporting proposals that
seek to increase corporate political transparency, including proposals on political congruency and political spending and lobbying disclosure.
Adopt a default position of generally supporting proposals thatask companies to commit to respecting workers’ rights to freedom of association and collective bargaining.
When asset managers vote against proposals that have racial
equity impacts – such as proposals related to racial equity audits, corporate political spending, board diversity, and workers’
rights – they should make their vote rationales public. Amongthe Big Four, BlackRock, Vanguard, and State Street publish rationales for a small percent of their votes, while Fidelity does
not publish any vote rationales.232

1.
2.
3.

Engage with their existing asset managers over their proxy voting records and policies with respect to racial equity and therisks of systemic racism, including their plans to (a) support relevant shareholder proposals in future years at portfolio companies, and (b) hold boards accountable for actions perpetuating
systemic racism and lack of racial and ethnic board diversity.
Hold asset managers accountable for improving their proxy voting records on racial equity-related proposals and policies byusing escalation tactics such as a) including an assessment ofasset managers’ racial equity-related proxy voting records andpolicies in quarterly investment consultants reports, b) putting
the asset managers on a “watchlist” for further scrutiny if they
do not improve on their proxy voting records and policies on
racial equity issues,233 and c) switching to a different asset manager if the extant asset manager is unresponsive to concerns.
Incorporate criteria regarding racial equity-related proxy voting
and policies into their asset manager search criteria, requests
for proposals, and assessments.

Section 06: Recommendations

Recommendations for
Proxy Advisors

1.
2.

Adopt language in all guidelines, including US benchmark
guidelines, recommending support for racial equity-related
proposals, including proposals related to racial equity audits,
corporate political transparency, board diversity disclosure, andworkers’ rights.
Recommend votes against relevant directors at companies thatfail to meet a minimum level of thirty percent racial and ethnic
board diversity.

Page 39

Recommendations for
Policymakers and Regulators
Congress should urge and enable the SEC to engage in rulemaking
that mandates and standardizes disclosures related to corporate political spending, lobbying, and human capital management issues – allof which have clear racial equity implications:

1.
2.
3.
4.

Repeal the longstanding appropriations rider preventing the
SEC from finalizing, issuing, or implementing rules, regulations,or orders that would require publicly traded companies to disclose their political contributions, policies, and expenditures.
Urge the SEC to promulgate a rule requiring publicly traded
companies to disclose their federal, state, and local corporate
lobbying expenditures, their lobbying strategy, and any material
risks related to lobbying spending and strategy.
Urge the SEC to promulgate a rule requiring publicly traded
companies to disclose human capital management data andpolicies relevant to long-term value creation.
Amend the Securities Exchange Act to require publicly traded companies to conduct an independent racial equity audit
no less often than every five years. The company should be required to issue a report detailing the findings and recommendations of the racial equity audit and attach it as an exhibit to
its Form 10-K filings covering the year the audit was completed.

Section 07: Appendices

Page 40

Appendices07Section 07: Appendices
Appendix A

Appendix A

Data Sources andMethodology
Selection of asset
managers
This report examines the voting records ofeighteen global asset managers and the voting
recommendations of the two largest proxy advisors, Institutional Shareholder Services andGlass Lewis. To assemble our list of asset managers, we relied on data collected by Pensions& Investments in its annual survey of the largest managers of US institutional tax-exempt
assets. To be included in our analysis, an asset
manager had to have more than $1 trillion inworldwide AUM and an asset mix of at least
twenty percent equities as of December 31,
2022. Geode is included in our analysis despite
having less than $1 trillion in AUM because it
serves as sub-advisor to all of Fidelity’s equity
index funds. Whereas previous editions of Equity in the Boardroom assigned Geode’s votes
to Fidelity, this edition separately examines
the voting records of Geode and Fidelity. The
full list of asset managers covered in the report
can be found in Appendix B.

Selection of shareholder
proposals
We used Diligent Market Intelligence and theInterfaith Center for Corporate Responsibility’s ShareEx platform to identify shareholder proposals related to racial equity audits,
political spending and lobbying disclosures,
political congruence, and freedom of association. We limited our analysis to shareholder
proposals voted on at S&P 500 companies
headquartered in the US that had their annual general meetings between July 1, 2022, andJune 30, 2023. The universe of shareholder
proposals included fourteen racial equity audit
proposals, 25 political spending and lobbying
disclosure proposals, thirteen political congruence proposals, and seven freedom of association proposals.
In selecting racial equity audit proposals, we

did not include proposals that tried to cancel
ongoing racial equity audits or proposed bad
faith audits intended to undermine progress
towards racial equity. These “anti-ESG” proposals, submitted by the National Center for
Public Policy Research and The Bahnsen Family Trust, asked that companies rescind plans
to undertake a racial equity audit; requested a
racial equity or civil rights audit, but asked thatthe audit assess the impact of DEI policies on“returns to merit”; asserted that DEI initiatives are unlawful and discriminatory against“non-diverse” employees; and expressed skepticism about the existence of systemic racism
by placing words like anti-racist, equity, andracism in quotation marks.234 Twelve such proposals were put to a vote in 2023.
In selecting proposals related to corporate
political transparency, we did not include proposals that requested disclosure on politicalactivities undertaken outside the US, proposals focused on climate lobbying alignment,
and proposals that requested that companies
altogether cease political spending. We also
excluded proposals asking companies to condition donations to third-party political groups
on the group submitting detailed reports on
its expenditures for political activities. The fulllist of proposals covered in the report can befound in Appendix C.

Selection of companies
that ran slates of all-white
director nominees
To identify companies that ran slates of allwhite director nominees, we obtained a custom dataset from Institutional Shareholder
Services ESG (ISS ESG) detailing the number of board members and number of diverse
directors at every S&P 500 company as of its
most recent annual general meeting during
the period July 1, 2022 – June 30, 2023. ISS generates racial and ethnic board diversity data
based on company disclosures and feedback

Page 41

collected directly from issuers. In cases when
there is no disclosure or issuer feedback available, ISS makes a subjective determination of
the director’s race or ethnicity based on publicly available information including company
documents, membership in self-identifying associations such as The Executive LeadershipCouncil or Latino Corporate Directors Association, LinkedIn profiles, and reputable news
sources. ISS ESG’s race and ethnicity classifications are a more granular version of the raceand ethnicity classifications developed by the
US Office of Management and Budget (OMB)in OMB Directive 15.
The dataset we obtained from ISS ESG suggested that there were four companies that
had all-white boards as of their 2023 annual
general meetings – Caesars Entertainment,
Inc., Chubb Ltd., Dover Corporation, and J.B.
Hunt Transport Services, Inc. We verified thedata provided by ISS ESG by cross checking it
against the board diversity metrics provided ineach issuer’s proxy statement. In doing so, we
decided to exclude J.B. Hunt from our analysis
because we found that one of its director nominees, Persio Lisboa, is widely recognized as a
Latino business leader.235

Methodology forcalculating votes
Proxy voting data was obtained from Diligent, which aggregates information from SEC
Form N-PX filings, public sources, and data
provided directly to Diligent by investors. In
some cases, Diligent classifies a parent asset
manager and one or more of its subsidiaries
as separate voting entities. For instance, Invesco Advisors and Invesco’s subsidiary Invesco
Capital Management are classified as separate voting entities in the Diligent database. In
these cases, we assigned the subsidiary’s votes
to the parent asset manager if the subsidiary’s
investment strategy includes US equities andif the subsidiary adheres to the same proxyvoting guidelines as the parent company. Voting entities that Diligent classifies as “Sub-Advised” or “Multi-Managed” were not included
in our analysis. For example, funds belonging
to “BNY Mellon” were included in the analysis, but funds belonging to “BNY Mellon(Multi-Managed)” and “BNY Mellon (Sub-Advised)” were not. The full list of voting entities
as classified by Diligent can be found in Appendix D.
We consider an asset manager to have supported a proposal if 75 percent or more ofSection 07: Appendices
Appendix A

the funds in its fund family voted for the proposal. We consider an asset manager to have
opposed a proposal if 75 percent or moreof the funds in its fund family voted against
the proposal. In cases where there was lessagreement among funds in the same fundfamily, the asset manager’s vote is recorded
as “mixed.” For director elections, “withheld”
votes are counted as “votes against.” Abstentions are counted as “votes against” when thecompany’s voting standards treat abstentions
as a vote against the proposal. Abstentions
are not counted when the company’s voting
standards treat abstentions as having no effecton the proposal. In the few cases where we
detected that there was split voting within afund with respect to a particular proposal, we
excluded the fund from our vote tabulations.
The exclusion of these funds did not impact
or alter the overall outcome of the analysis.
We primarily obtained proxy advisor voting
recommendations from Diligent. Diligent reports Glass Lewis’s actual voting recommendations and “synthetic” ISS recommendations
that it derives using a proprietary methodology. In cases where Diligent did not report thesynthetic ISS recommendation, we obtained
the actual ISS voting recommendation directly from ISS Proxy Exchange.
This report also identifies proposals that would
have reached majority support if the four largest asset managers had voted in favor. To deter-mine whether a proposal would have passedwith the support of the Big Four, we added
the percent support that the proposal received
to the percent of common stock outstanding (CSO) held by each asset manager as ofMarch 31, 2023. Percent CSO information was
obtained from Diligent, which aggregates thisdata from SEC N-PORT filings. This approach
does not capture the exact voting impact of
the Big Four, since as of 2023 asset managers
were not required to disclose the number ofshares that were voted or instructed to be voted.236 On the one hand, this method potentially overestimates the Big Four’s voting impact
since an asset manager may not have voting
power over shares that it beneficially owns. On
the other hand, this method potentially underestimates the Big Four’s voting impact since
the largest asset managers tend to vote theirshares at a higher rate than other shareholders.
This is especially the case at companies withlow shareholder turnout, where the numberof shares voted at the annual general meetingcan be significantly smaller than the numberof shares outstanding. In our estimation, thepercent CSO method is conservative in that it
likely understates the potential of the Big Fourto swing close votes.
The information in this report has been prepared from sources and data the authors believe to be reliable, but we assume no liability
for and make no guarantee as to its adequacy,
accuracy, timeliness, or completeness.

Page 42Section 07: Appendices
Appendix B

Page 43

Appendix B

List of Asset Managers
Asset Manager1

Worldwide Assets Under
Management (millions)BlackRock Inc.

$ 8,594,488

Vanguard Group Inc.

$ 7,252,612

Fidelity Investments$ 3,655,574

State Street Global Advisors$ 3,481,473

J.P. Morgan Asset & Wealth Management$ 2,765,710

The Goldman Sachs Group Inc.

$ 2,547,000

Capital Group$ 2,175,965

Amundi2$ 2,031,753

BNY Mellon Investment Management$ 1,836,032

Legal & General Investment Management (Holdings) Ltd.

$ 1,444,393

Invesco3$ 1,409,204

Franklin Templeton$ 1,387,686

T. Rowe Price Associates Inc.

$ 1,274,700

Morgan Stanley Investment Management4$ 1,234,226

Wellington Management Group LLP$ 1,149,360

Nuveen$ 1,090,174

Northern Trust Asset Management$ 1,038,406

Geode Capital Management5$ 866,352

Notes:
1
Only includes asset managers with more than $1 trillion in worldwide AUM and an asset mix of greater than twenty percent equities.
2
Includes the assets of Amundi's subsidiary, Amundi Asset Management US ($90,613 million AUM). Amundi US is not included in Majority Action's analysis.
3 Does not include the assets of Invesco's subsidiary, Invesco Capital Management LLC ($400,637 million AUM), which is Invesco's ETF business. Invesco Capital Management is included in Majority Action's analysis and its votes are assigned to the parent company, Invesco.
4 Includes the assets of Morgan Stanley's subsidiaries Atlanta Capital ($31,849 million AUM), Eaton Vance Management ($77,205 million AUM), Calvert Research and Management ($33,599 million AUM),
and Parametric Portfolio Associates ($386,291 million AUM). These subsidiaries are not included in Majority Action's analysis.
5 Geode is included in Majority Action's analysis even though it has less than $1 trillion AUM. Geode is a subsidiary of Fidelity Investments and serves as sub-advisor to all of Fidelity's equity index funds.
Sources:
Data is sourced from Pensions & Investments' annual survey of the world's largest money managers. To qualify for inclusion in the Pensions & Investments database, the firm must manage assets for US
institutional tax-exempt clients, such as qualified retirement plans, endowments, or foundations. All data is as of December 31, 2022. See “The Largest Money Managers,” Pensions & Investments, January
12, 2023, https://www.pionline.com/crain-twi-download/1020316/field_issue_upload and "How P&I compiled the manager data," Pensions & Investments, June 12, 2023, https://www.pionline.com/largest-money-managers/how-pi-compiled-manager-data. Subsidiary AUM data is sourced from each subsidiary's latest SEC Form ADV.

Section 07: Appendices
Appendix C

Page 44

Appendix C

List of Shareholder Resolutions
2023 Proxy Season
CompanyRes.
No.

Proposal Text

Category

Proponent

For(%)

Wells Fargo & Company

11

Shareholder Proposal – Policy on Freedom of
Association and Collective Bargaining

Freedom of Association

AFL-CIO Reserve Fund

35.6

Delta Air Lines Inc.

6

Adoption of Freedom of Association and Collective
Bargaining Policy

Freedom of Association

As You Sow

32.6

Chipotle Mexican Grill Inc.

6

Proposal Requesting Adoption of a Non-Interference
PolicyFreedom of Association

City of N.Y. Office of the Comptroller (New York City
Pension Funds)

33.3

Starbucks Corporation

8

Shareholder Proposal Regarding Assessment ofWorker Rights Commitment

Freedom of Association

City of N.Y. Office of the Comptroller (New York
City Pension Funds), Shareholder Association for
Research and Education, Trillium Asset Management
Corporation, Pensions Investment ResearchConsultants

52

Netflix Inc.

8

Shareholder Proposal: Policy on Freedom of
Association

Freedom of Association

New York State Common Retirement Fund

36.3

CVS Health Corp

8

Stockholder Proposal Requesting a Report on aWorker Rights Assessment

Freedom of Association

New York State Common Retirement Fund

26.3

Amazon.com Inc.

16

Shareholder Proposal Requesting Additional
Reporting on Freedom of Association

Freedom of Association

Shareholder Association for Research and Education,
CCLA Investment Management

34.9

Comcast Corporation

10

Shareholder Proposal to Report on PoliticalContributions and Company Values Alignment

Political Congruency

Arjuna Capital

19

AbbVie Inc.

6

Stockholder Proposal on Political Spending

Political Congruency

As You Sow

15.1

Coca-Cola Company (The)7

Shareholder Proposal Regarding Political
Expenditures Values Alignment

Political Congruency

Clean Yield Asset Management

29.1

Walt Disney Company

7

Proposal — Political Expenditures Report

Political Congruency

Educational Foundation of America

36.3

UnitedHealth Group
Incorporated

6

Shareholder Proposal Requiring a PoliticalContributions Congruency Report

Political Congruency

Educational Foundation of America

28.2

Wells Fargo & Company

6

Shareholder Proposal – Report on Congruency of
Political Spending

Political Congruency

Harrington Investments

28.5

JPMorgan Chase & Co

11

Report Analyzing the Congruence of the Company's
Political and Electioneering Expenditures

Political Congruency

James McRitchie

32.1

FedEx Corporation

6

Report on Alignment Between Company Values andElectioneering Contributions

Political Congruency

Clean Yield Asset Management

36.1

Leidos Holdings, Inc.

5

Stockholder Proposal Regarding Report on Political
Expenditures Congruence

Political Congruency

Richard Lippert

40.6

Northrop Grumman
Corporation

6

Shareholder Proposal to Annually Conduct an
Evaluation and Issue a Report Describing the
Alignment of the Company’s Political Activities withIts Human Rights Policy

Political Congruency

School Sisters of Notre Dame Cooperative Investment
Fund

20

Home Depot Inc. (The)7

Shareholder Proposal Regarding PoliticalContributions and Congruency Analysis

Political Congruency

Tara Health Foundation

31.3

Pfizer Inc.

9

Political Contributions Congruency Report

Political Congruency

Tara Health Foundation

14.1

Altria Group5

Shareholder Proposal – Report on Congruence of
Political and Lobbying Expenditures with Company
Values and Policies

Political Congruency

Trinity Health

10.9

Amphenol Corporation

5

Improve Political Spending Disclosure

Political Spending and
Lobbying Disclosure

No mention of racial equity audits

45.2

L3Harris Technologies Inc.

5

Transparency in regard to Lobbying

Political Spending and
Lobbying Disclosure

No mention of racial equity audits

37.9

AbbVie Inc.

7

Stockholder Proposal on Lobbying

Political Spending and
Lobbying Disclosure

Dana Investment Advisers

36.3

Bio-Rad Laboratories Inc.

5

Stockholder Proposal: Political Disclosure

Political Spending and
Lobbying Disclosure

James McRitchie and Myra K. Young

15.6

Goldman Sachs Group Inc.
(The)

5

Shareholder Proposal Regarding a Report on
Lobbying

Political Spending and
Lobbying Disclosure

John Chevedden

35.6

HCA Healthcare, Inc.

5

Shareholder Proposal Regarding Political Spending
Disclosure

Political Spending and
Lobbying Disclosure

John Chevedden

23.5

Huntington Ingalls Industries
Inc.

4

Stockholder Proposal Requesting that HII Discloseon its Website an Annual Report of HII’s Direct andIndirect Lobbying Activities and Expenditures

Political Spending and
Lobbying Disclosure

John Chevedden

36.5International Business
Machines Corporation (IBM)6

Stockholder Proposal Requesting a Public Report on
Lobbying Activities

Political Spending and
Lobbying Disclosure

John Chevedden

48.1

Section 07: Appendices
Appendix C

Page 452023 Proxy Season
CompanyRes.
No.

Proposal Text

Category

Proponent

For(%)

FedEx Corporation

7

Lobbying Activity and Expenditure Report

Political Spending and
Lobbying Disclosure

International Brotherhood of Teamsters General Fund

34.7

Mastercard Incorporated

8Consideration of a Stockholder Proposal Requesting
Lobbying Disclosure

Political Spending and
Lobbying Disclosure

John Chevedden

28.3

Cintas Corporation

8

Shareholder Proposal Regarding Report on PoliticalContributions

Political Spending and
Lobbying Disclosure

International Brotherhood of Teamsters General Fund

45.5

Fox Corp

5

Disclose Money Spent on Lobbying

Political Spending and
Lobbying Disclosure

No mention of racial equity audits

31.4

Caterpillar Inc.

7

Shareholder Proposal — Lobbying Disclosure

Political Spending and
Lobbying Disclosure

Myra K. Young

29.2

News Corp

4

Stockholder Proposal Requesting Additional
Reporting on Lobbying

Political Spending and
Lobbying Disclosure

Kenneth Steiner

13.7

Stryker Corporation

5

Shareholder Proposal — Political Disclosure

Political Spending and
Lobbying Disclosure

Myra K. Young

36.8

Caesars Entertainment, Inc.

5

Shareholder Proposal Regarding Company Political
Disclosures

Political Spending and
Lobbying Disclosure

New York State Common Retirement Fund

42

Abbott Laboratories

7

Shareholder Proposal on Lobbying Disclosure

Political Spending and
Lobbying Disclosure

Province of St. Joseph of the Capuchin Order

23.2

Boeing Company (The)7

Shareholder Proposal — Report on Lobbying
Activities

Political Spending and
Lobbying Disclosure

Province of St. Joseph of the Capuchin Order

37.3

Charter Communications
Inc.

5

Stockholder Proposal Regarding Lobbying Activities

Political Spending and
Lobbying Disclosure

Service Employees International Union Pension Plans
Master Trust

31.9

DTE Energy Company

7

Shareholder Proposal — Lobbying Report

Political Spending and
Lobbying Disclosure

Service Employees International Union Pension Plans
Master Trust

29.7

Eli Lilly and Company

7

Proposal to Publish an Annual Report Disclosing
Lobbying Activities

Political Spending and
Lobbying Disclosure

Service Employees International Union Pension Plans
Master Trust

31.4

McDonald's Corporation

9

Advisory Vote on Annual Report on Lobbying
Activities

Political Spending and
Lobbying Disclosure

SOC Investment Group

50.3

Yum! Brands Inc.

6

Shareholder Proposal Regarding Issuance of Annual
Report on Lobbying

Political Spending and
Lobbying Disclosure

SOC Investment Group

41.9

Alphabet Inc.

6

Stockholder Proposal Regarding a Lobbying Report

Political Spending and
Lobbying Disclosure

United Church Funds

17.9

Meta Platforms, Inc.

6

Shareholder Proposal Regarding Report on Lobbying
Disclosures

Political Spending and
Lobbying Disclosure

United Church Funds

14.6

Chevron Corporation

10

Stockholder Proposal to Report on Racial Equity
Audit

Racial Equity Audit

American Baptist Home Mission Society

9.8

Equifax Inc.

6

Shareholder Proposal Regarding Racial Equity Audit

Racial Equity Audit

City of Philadelphia Public Employees Retirement
System30.8

Mohawk Industries Inc.

5

Shareholder Proposal Regarding Racial Equity Audit

Racial Equity Audit

Handlery Hotels

20.7

UnitedHealth Group
Incorporated

5

Shareholder Proposal Seeking a Third-Party Racial
Equity Audit

Racial Equity Audit

Mercy Investment Services

20.6

AT&T Inc.

6

Stockholder Proposal — Racial Equity Audit

Racial Equity Audit

Nathan Cummings Foundation

21.5

Coca-Cola Company (The)5

Shareholder Proposal Requesting an Audit of theCompany's Impact on Nonwhite Stakeholders

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

16.5

Comcast Corporation

7

Shareholder Proposal to Perform Independent Racial
Equity Audit

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

10.8

Goldman Sachs Group Inc.
(The)

8

Shareholder Proposal Regarding a Racial Equity
Audit

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

11.6

Valero Energy Corporation

6

Stockholder Proposal to Oversee and Issue an
Additional Racial Equity Audit and Report

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

11.9

Altria Group

6

Shareholder Proposal Regarding Civil Rights Audit

Racial Equity Audit

Sisters of St. Francis of Philadelphia

30.8Bank of America
Corporation

11

Shareholder Proposal Requesting a Racial Equity
Audit

Racial Equity Audit

SOC Investment Group

15.2

American Water Works

5

Shareholder Proposal: Racial Equity Audit

Racial Equity Audit

Trillium Asset Management

40

Travelers Companies Inc./
The

8

Shareholder Proposal Related to a Racial Equity
Audit

Racial Equity Audit

Trillium Asset Management

35.3

Walmart Inc.

7

Shareholder Proposal — Racial Equity Audit

Racial Equity Audit

United for Respect

18.2

Section 07: Appendices
Appendix C

Page 462022 Proxy Season
CompanyRes.
No.

Proposal Text

Category

Proponent

For(%)

AbbVie Inc.

8

Stockholder Proposal on Political Spending

Political Congruency

As You Sow

39.5

Charter Communications
Inc.

5

Stockholder Proposal Regarding Political andElectioneering Expenditure Congruency Report

Political Congruency

Handlery Hotels

30

The Cigna Group

6

Shareholder Proposal – Political Contributions
ReportPolitical Congruency

No mention of racial equity audits

46.3

FedEx Corporation

5

Report on Alignment Between Company Values andElectioneering Contributions

Political Congruency

Clean Yield Asset Management

38.6

Gilead Sciences Inc.

8

Stockholder Proposal Requesting that the Board
Publish a Third-Party Review of Gilead’s Lobbying
Activities

Political Congruency

Maryknoll Sisters of St. Dominic

50.2

Home Depot Inc. (The)7

Shareholder Proposal Regarding PoliticalContributions Congruency Analysis

Political Congruency

Tara Health Foundation

42.6

Johnson & Johnson

12

Third Party Review and Report on Lobbying
Activities Alignment with Position on Universal
Health Coverage

Political Congruency

Share/HLB Investments ULC

43.3

Eli Lilly and Company

9

Proposal to Disclose Lobbying Activities andAlignment with Public Policy Positions andStatements

Political Congruency

CommonSpirit Health34

Microsoft Corporation

5

Report on Lobbying Activities Alignment with
Company Policies

Political Congruency

Congregation of the Sisters of St. Joseph of Peace

38

AT&T

6

Political Congruency Report

Political Congruency

As You Sow

44.1

UnitedHealth Group
Incorporated

5

Shareholder Proposal Regarding PoliticalContributions Congruency Report

Political Congruency

Educational Foundation of America

38.2

Apple Inc.

9

Shareholder Proposal – Civil Rights Audit

Racial Equity Audit

SOC Investment Group

53.6

American Water Works

5

Shareholder Proposal: Racial Justice Audit

Racial Equity Audit

Trillium Asset Management

48.3

Comcast Corporation

5

Shareholder Proposal to Perform Independent Racial
Equity Audit

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

18.3

Chipotle Mexican Grill Inc.

6

Shareholder Proposal to Commission a Racial Equity
Audit

Racial Equity Audit

New York State Common Retirement Fund

36.4

Salesforce, Inc.

7

Stockholder Proposal Regarding a Racial Equity
Audit

Racial Equity Audit

Tulipshare Limited

33.9

Chevron Corporation

9

Stockholder Proposal to Report on Racial Equity
Audit

Racial Equity Audit

Investor Advocates for Social Justice

47.5

Elevance Health, Inc.

6

Shareholder Proposal Requesting a Racial Impact
Audit and Report

Racial Equity Audit

Trillium Asset Management

41.2

Alphabet Inc.

9

Stockholder Proposal Regarding a Racial Equity
Audit

Racial Equity Audit

Nathan Cummings Foundation

22.4

Home Depot Inc. (The)10

Shareholder Proposal Regarding Racial Equity Audit

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

62.8

Intel Corporation

6

Stockholder Proposal Requesting a Third-Party
Audit and Report on Whether Written Policies or
Unwritten Norms at the Company Reinforce Racism
in Company Culture

Racial Equity Audit

NorthStar Asset Management

16.7

Johnson & Johnson

7

Shareholder Proposal – Third Party Racial Justice
Audit

Racial Equity Audit

Mercy Investment Services

62.6

McDonald’s Corporation

8

Advisory Vote on Third-Party Civil Rights Audit

Racial Equity Audit

SOC Investment Group55.8

Mondelez International Inc.

4

Conduct and Publish Racial Equity Audit

Racial Equity Audit

Shareholder Association for Research & Education

48.6

Altria Group

4

Shareholder Proposal - Commission a Civil Rights
Equity Audit

Racial Equity Audit

Sisters of St. Francis of Philadelphia

62.2

Republic Services Inc.

6

Shareholder Proposal to Commission a Third-Party
Civil Rights Audit

Racial Equity Audit

International Brotherhood of Teamsters General Fund

38.7

Travelers Companies Inc/
The

7

Shareholder Proposal Relating to a Racial Equity
Audit

Racial Equity Audit

Trillium ESG Global Equity Fund

47.2

Wells Fargo & Company

10

Shareholder Proposal – Conduct a Racial Equity
Audit

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

36.1

Waste Management Inc.

4

Report on Civil Rights Audit

Racial Equity Audit

International Brotherhood of Teamsters General Fund

55

Oracle Corporation

5

Stockholder Proposal Regarding Racial Equity Audit

Racial Equity Audit

Service Employees International Union Pension Plans
Master Trust

31.8

Section 07: Appendices
Appendix D

Page 47

Appendix D

List of Voting Entities as Listed in Diligent
Parent Asset Manager

Additional Voting Entities
Assigned To Asset Manager 1

Amundi Asset Management
BlackRock Inc.
BNY Mellon
Capital Group

Capital Guardian Trust Co.

Fidelity Management & Research Co. (FMR)

Fidelity Institutional Asset Management

Franklin Templeton2

Brandywine Global Investment Management
ClearBridge Investments LLC
Martin Currie Investment Management
Royce Investment Partners

Geode Capital Management
Goldman Sachs Asset Management LP
Invesco Advisors, Inc.

Invesco Capital Management LLC

JPMorgan
LGIM
Morgan Stanley Investment Management, Inc.
Northern Trust Investments
Nuveen Asset Management LLC

TIAA-CREF Asset Management LLC
Winslow Capital Management (Nuveen funds only)3State Street Corporation
T. Rowe Price Associates
Vanguard Group, Inc.
Wellington Management

Notes:
1 As explained in Appendix A: Data Sources and Methodology, a subsidiary’s votes are assigned to the parent asset manager if the subsidiary’s investment strategy includes US equities and if the subsidiaryadheres to the same proxy voting guidelines as the parent company.
2 Franklin Templeton is a holding company and conducts all business through its subsidiaries, which each have their own proxy voting guidelines. Thus, all Franklin Templeton subsidiaries that are classified
as separate voting entities in Diligent are assigned to Franklin Templeton so long as they invest in US equities.
3 The Nuveen Winslow Large-Cap Growth Fund, which is sub-advised by Winslow Capital Management, is assigned to Nuveen even though Winslow votes the fund’s shares according to ISS recommendations rather than Nuveen’s proxy voting guidelines.

Section 07: Appendices
Appendix E

Page 48

Appendix E

Asset Managers’ and Proxy Advisors’
2023 Policies on Racial Equity Audits
Asset Manager or
Proxy Advisor

Relevant Text Excerpted From Proxy Voting Guidelines

Franklin Templeton(Clearbridge Investments)

Proposals asking a company to conduct an independent racial equity and/or civil rights audit, which we generally support but vote on a case-by-case basis given the variability in the language.237

Glass Lewis

Issues related to racial equity have intensified significantly in recent years. As a result, companies can face increased reputational risk when their operations result in adverse stakeholder impacts, particularly when thosestakeholders belong to minority or underrepresented groups. Companies can also face legal and regulatory
risk if their business engages in or appears to engage in potentially discriminatory behavior or if such behavior
results in disparate impacts on certain groups of stakeholders. As a result of these potential risks, we believethat companies should be taking steps to mitigate any potential adverse impacts both internally and externally. In many cases, we believe that undertaking an audit of such impacts could be beneficial as a risk mitigation
tool.
When analyzing these resolutions, Glass Lewis will assess: (i) the nature of the company’s operations; (ii) thelevel of disclosure provided by the company and its peers on its internal and external stakeholder impacts andthe steps it is taking to mitigate any attendant risks; and (iii) any relevant controversies, fines, or lawsuits. After taking into account these company-specific factors, we will generally recommend in favor of well-crafted
proposals requesting that companies undertake a racial or civil rights-related audit when we believe that doing
so could help the target company identify and mitigate potentially significant risks.238
Generally vote CASE-BY-CASE on shareholder proposals requesting the board oversee a racial equity audit.
While we believe the decision to initiate an independent audit is best left to management judgment under theoversight of the board of directors, the following factors are generally considered:

Goldman Sachs

 The degree to which existing relevant policies and practices are disclosed; Recent, significant company controversies, fines, or litigation regarding human rights at the company or
its suppliers; and Whether the gender and racial minority representation of the company’s board is reasonably inclusive in
relation to companies of similar size and business.239
Vote case-by-case on proposals asking a company to conduct an independent racial equity and/or civil rights
audit, taking into account: The company’s established process or framework for addressing racial inequity and discrimination internally; Whether the company adequately discloses workforce diversity and inclusion metrics and goals;ISS Whether the company has issued a public statement related to its racial justice efforts in recent years, or
has committed to internal policy review; Whether the company has engaged with impacted communities, stakeholders, and civil rights experts;
 The company’s track record in recent years of racial justice measures and outreach externally; and Whether the company has been the subject of recent controversy, litigation, or regulatory actions related
to racial inequity or discrimination.240

LGIM

There has been an increase in the number of shareholder proposals asking companies to carry out an independent racial equity audit. We encourage companies to voluntarily requisition such reports as a matter ofgood corporate practice.241

Section 07: Appendices
Appendix E

Asset Manager or
Proxy Advisor
AmundiBlackRockBNY Mellon
Capital Group
Fidelity
Invesco
JPMorganMorgan Stanley
Northern Trust
NuveenState Street
T. Rowe Price
Vanguard
Wellington

Page 49

Relevant Text Excerpted From Proxy Voting Guidelines

No mention of racial equity auditsSection 07: Appendices
Appendix F

Page 50

Appendix F

Asset Managers’ and Proxy Advisors’ 2023 Policies on
Director Accountability for Racial and Ethnic Board Diversity
Asset Manager or
Proxy Advisor 242
AmundiBlackRock

Relevant Text Excerpted From Proxy Voting Guidelines 243
No language on director accountability for racial and ethnic board diversity. 244
In the US, we believe that boards should aspire to at least 30% diversity of membership, and we encourage large
companies, such as those in the S&P 500, to lead in achieving this standard. In our view, an informative indicatorof diversity for such companies is having at least two women and a director who identifies as a member of anunderrepresented group…245
To the extent that, based on our assessment of corporate disclosures, a company has not adequately explained
their approach to diversity in their board composition, we may vote against members of the nominating/governance committee…246

BNY Mellon

We look for diversity including gender, and where discernible, experience, race, tenure and other relevant considerations. We generally vote AGAINST the Nominating Chairperson if there is less than one woman on the board.247

Capital GroupIn the United States, we generally expect boards to have at least one female director and at least one racially/ethnically diverse director but will take board size into account when evaluating this.248 w

Fidelity

Fidelity will evaluate board composition and generally will oppose the election of certain or all directors if, by way
of example: ...There are no racially or ethnically diverse directors....249
Regarding the nominating committee, we will consider recommending that shareholders vote against... The chairof the nominating committee of a board with fewer than one director from an underrepresented community on
the board, at companies within the Russell 1000 index…250

Glass Lewis

Geode

Beginning in 2023, we will generally recommend against the chair of the nominating committee of a board withfewer than one director from an underrepresented community on the board at companies within the Russell 1000
index. We define ‘underrepresented community director’ as an individual who self-identifies as Black, African
American, North African, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaskan Native, or who self-identifies as gay, lesbian, bisexual, or transgender…We may extend our underrepresented
community diversity recommendations to additional members of the nominating committee in cases where thecommittee chair is not standing for election due to a classified board, or based on other factors, including thecompany’s size and industry, applicable laws in its state of headquarters, and its overall governance profile.251
No language on director accountability for racial and ethnic board diversity. 252
Vote AGAINST or WITHHOLD from members of the Nominating Committee:253
 At companies incorporated in the US if the board does not have at least 10% women directors and at least
one other diverse board director;

Goldman Sachs

 At companies within the S&P S00, if, in addition to our gender expectations, the board does not have at least
one diverse director from a minority ethnic group; At companies not incorporated in the US, if the board does not have at least 10% women directors or does
not meet the requirements of local listing rules or corporate governance codes or national targets.

InvescoBoards should be comprised of directors with a variety of relevant skills and industry expertise together with a diverse profile of individuals of different genders, ethnicities, race, skills, tenures and backgrounds to provide robust
challenge and debate. We consider diversity at the board level, within the executive management team and in the
succession pipeline...254
In addition, we will consider a company’s performance on broader types of diversity which may include diversityof skills, non-executive director tenure, ethnicity, race or other factors where appropriate and reasonably determinable. We will generally vote against the incumbent nominating committee chair if there are multiple concerns
on diversity issues.255

Section 07: Appendices
Appendix F

Asset Manager or
Proxy Advisor 242

Page 51

Relevant Text Excerpted From Proxy Voting Guidelines 243

ISS

For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of thenominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or
ethnically diverse members. An exception will be made if there was racial and/or ethnic diversity on the board
at the preceding annual meeting and the board makes a firm commitment to appoint at least one racial and/or
ethnic diverse member within a year.256

JPMorgan

We will utilize our voting power to bring about change where Boards are lagging in gender and racial/ethnic
diversity….We will generally vote against the chair of the Nominating Committee when the issuer lacks any gender
diversity or any racial/ethnic diversity unless there are mitigating factors. Mitigating factors include, among otherfactors, recent retirement of relevant directors, a relatively new public company, and an ongoing search for a
director.257

LGIM

In the autumn of 2020, we extended our diversity campaign to require ethnic representation at board level in developed markets, starting with the US and the UK. We ask the largest companies in these two markets to have atleast one board member from an ethnic minority background and this will now result in voting sanctions for thoseboards that do not have this minimum requirement.258

Morgan Stanley

In markets where information on director ethnicity is available, and it is legal to obtain it, and where it is relevant,
we will generally also consider not supporting the re-election of the nomination committee chair (or other resolutions when the nomination chair is not up for re-election) if the board lacks ethnic diversity and has not outlined
a credible diversity strategy.259

Northern Trust

The board should reflect the diversity of the workforce and society, ensuring that a variety of viewpoints are
represented in corporate decision-making. Northern Trust believes that an effective board should be comprised of
directors with a mix of skills and experience to ensure the Board has the necessary tools to perform its oversightfunction effectively; this includes diversity of background, experience, age, race, gender, ethnicity, and culture.
Northern Trust may vote against one or more directors where we have concerns relating to the composition anddiversity of the board.260

NuveenWe generally vote in favor of the board’s nominees but will consider withholding or voting against some or all
directors in the following circumstances:…When there is insufficient diversity on the board and the company has
not demonstrated its commitment to making the board more diverse.261

State Street

If a company in the S&P 500 or FTSE 100 does not have at least one director from an underrepresented racial or
ethnic community, we will vote against the Chair of the Nominating Committee.262

T. Rowe Price

We recognize diversity can be defined across a number of dimensions. However, if a board is to be consideredmeaningfully diverse, in our view some diversity across gender, ethnic, or nationality lines must be present. For
companies in the Americas, we generally oppose the re-elections of Governance Committee members if we findno evidence of board diversity.263

Vanguard

Lack of board diversity: Absent a compelling reason, a fund will generally vote against the nominating and/or
governance committee chair, or another relevant board member if the nominating and/or governance committee
chair is not up for reelection, if a company’s board is making insufficient progress in its diversity composition and/or in addressing its board diversity-related disclosures….264
A board should, at a minimum, represent diversity of personal characteristics, inclusive of at least diversity ingender, race, and ethnicity on the board.265
We reserve the right to vote against the re-election of the Nominating/Governance Committee Chair when theboard is not meeting local market standards from a diversity perspective or when the gender-diverse representation is below 20% at companies in major indices...266

Wellington

We reserve the right to vote against the reelection of the Nominating/Governance Committee Chair at US large
cap and FTSE 100 companies that failed to appoint at least one director from a minority ethnic group and failto provide clear and compelling reason for being unable to do so. We will continue to engage on diversity of theboard in other markets and may vote against the re-election of directors where we fail to see improvements.267

Section 08: Endnotes

Endnotes

08

Page 52

Section 08: Endnotes

Page 53

1 Walgreens Boots Alliance, “An open letter on racial injustice,” June 9, 2020, https://www.
walgreensbootsalliance.com/news-media/our-stories/an-open-letter-on-racial-injustice. (“Rampant,violent, discriminatory and lethal systems of oppression must be dismantled on a global scale andit cannot be done without the collective whole. And as a community and a corporation, we have aduty to be a catalyst for change, if only because we can.”); Richard Feloni, “These Are the Corporate
Responses to the George Floyd Protests That Stand Out,” JUST Capital, June 30, 2020, https://justcapital.com/news/notable-corporate-responses-to-the-george-floyd-protests/. (“The Quaker
Oats Company, a subsidiary of PepsiCo, announced it was ending its Aunt Jemima breakfast foods
brand. IBM has stopped investing in facial recognition software used by police forces, Microsoft
will no longer share its version with the police, and Amazon will stop sharing its software with
police for a year.”); Gillian Friedman, “Here’s What Companies Are Promising to Do to Fight
Racism,” New York Times, August 23, 2020, https://www.nytimes.com/article/companies-racism-george-floyd-protests.html. (“[Facebook] pledged to double the number of its black and Latinx
employees by 2023, and to increase the number of black people in leadership positions by 30
percent over the next five years.”); Detroit Regional Chamber, “The Kellogg Foundation: Michigan
Business Case for Racial Equity,” October 13, 2020, https://www.detroitchamber.com/the-kellogg-foundation-michigan-business-case-for-racial-equity/.

11 David Hood, “House GOP Doubles Down on Anti-ESG Messaging With New Measures,”
Bloomberg Law, September 15, 2023, https://news.bloomberglaw.com/esg/house-gop-doublesdown-on-anti-esg-messaging-with-new-measures; House of Representatives Judiciary Committee
Chairman Jim Jordan, “Chairman Jordan Subpoenas BlackRock and State Street in ESG Investigation,” December 15, 2023, https://judiciary.house.gov/media/press-releases/chairman-jordan-subpoenas-blackrock-and-state-street-esg-investigation; Lydia Moynihan, “House probe into ESG violations expands to proxy advisors ISS and Glass Lewis,” New York Post, December 21, 2023, https://nypost.com/2023/12/21/business/house-judiciary-probe-into-esg-expands-to-iss-and-glass-lewis/.

2 Jessica DiNapoli, “More than 150 companies urge U.S. Congress to pass voting rights act,”
Reuters, July 14, 2021, https://www.reuters.com/world/us/more-than-150-companies-urge-us-congress-pass-voting-rights-act-2021-07-14/; Judd Legum and Tesnim Zekeria, “Major corporations
say they will stop donating to members of Congress who tried to overturn the election,” Popular
Information, January 10, 2021, https://popular.info/p/three-major-corporations-say-they.

13 As of the writing of this report, there have been no anti-ESG bills passed by Congress. Of the
165 pieces of state-level legislation introduced in 2023, only 28 passed and only 22 were signed intolaw. See Gregory Hershman, “Anti-ESG bills found unified opposition in US statehouses,” Principles for Responsible Investment, July 25, 2023, https://www.unpri.org/pri-blog/anti-esg-bills-foundunified-opposition-in-us-statehouses/11658.article. Bills that were enacted have faced implementation challenges, with some local governments and state pension funds experiencing significant
compliance costs. See Karin Rives, “Wall Street thrived, small towns lost as anti-ESG campaign
raged in 2023,” S&P Global, January 3, 2024, https://www.spglobal.com/marketintelligence/en/
news-insights/latest-news-headlines/wall-street-thrived-small-towns-lost-as-anti-esg-campaignraged-in-2023-79749380 and Kate Marino, “Texas’ “anti-woke” policies cost taxpayers millions,”
Axios, February 22, 2023, https://www.axios.com/local/dallas/2023/02/22/texas-esg-policies-cost.
Other state laws are facing litigation challenges from pension fund beneficiaries. See Margarida
Correia, “Oklahoma hit with suit over anti-ESG blacklist barring BlackRock, others,” Pensions &Investments, November 21, 2023, https://www.pionline.com/esg/oklahoma-hit-suit-over-anti-esgblacklist-barring-blackrock-others.

3 Saima May Sidik, “Death Rates among Black People in the U.S. Are Rising after Falling,” Scientific American, June 6, 2023, https://www.scientificamerican.com/article/death-rates-among-blackpeople-in-the-u-s-are-rising-after-falling/.
4 Megan Armstrong et al, “Corporate commitments to racial justice: An update,” McKinsey Institute for Black Economic Mobility, February 21, 2023, https://www.mckinsey.com/bem/our-insights/
corporate-commitments-to-racial-justice-an-update#/. (“[The] pace of monetary commitments[to racial justice] has slowed year-over-year (down 32 percent since 2021)...Compared with previous
years, companies are making fewer public statements in support of racial justice, despite the riseof the inclusive consumer.”); Te-Ping Chen and Lauren Weber, “The Rise and Fall of the Chief
Diversity Officer,” The Wall Street Journal, July 21, 2023, https://www.wsj.com/business/c-suite/
chief-diversity-officer-cdo-business-corporations-e110a82f; Taylor Telford, “As DEI gets moredivisive, companies are ditching their teams,” Washington Post, February 18, 2024, https://www.
washingtonpost.com/business/2024/02/20/corporate-diversity-job-cuts/; January 31, 2024, Ephrat
Livni and Sarah Kessler, “After the Capitol Attack, Companies Pledged to Rethink Political Giving.
Did They?” New York Times, January 6, 2024, https://www.nytimes.com/2024/01/06/business/
dealbook/jan-6-companies-donations.html; Ilya Marritz, ”When GOP Attorneys General Embraced
Jan. 6, Corporate Funders Fled. Now They’re Back,” ProPublica, April 20, 2023, https://www.propublica.org/article/raga-gop-jan6-amazon-walmart-comcast-contributions.
5 Kimberly Adams, “Businesses are quieter on social justice issues as support for Black Lives
Matter dips,” Marketplace, June 20, 2023, https://www.marketplace.org/2023/06/20/businesses-social-justice-black-lives-matter-support/.
6 Trisha Thadani and Jacob Bogage, “The campaign against affirmative action shifts to corporate
America,” The Washington Post, July 19, 2023, https://www.washingtonpost.com/technology/2023/07/15/affirmative-action-workplace-diversity-equity-inclusion; Anne D’Innocenzio andAlexandra Olson, “DEI opponents are using a 1866 Civil Rights law to challenge equity policies in
the workplace,” Associated Press, January 14, 2024, https://apnews.com/article/dei-corporate-diversity-supreme-court-affirmative-action-a4ddf354423feee9697310366248f646; Nate Raymond,“Venture capital fund defends grants for Black women in US appeals court,” Reuters, https://www.reuters.com/sustainability/society-equity/venture-capital-fund-defends-grants-black-women-us-appeals-court-2024-01-31/; Trip Gabriel and Dana Goldstein, “Disputing Racism’s Reach,
Republicans Rattle American Schools,” New York Times, June 1, 2021, https://www.nytimes.
com/2021/06/01/us/politics/critical-race-theory.html; Tonya Mosley, “The Voting Rights Act isbeing attacked from ‘every possible angle,’ journalist says,” NPR, November 30, 2023, https://www.
npr.org/2023/11/30/1216054095/the-voting-rights-act-is-being-attacked-from-every-possible-anglejournalist-say; Rick Rojas and Sean Keenam, “Dozens of ‘Cop City’ Activists Are Indicted on Racketeering Charges,” New York Times, September 5, 2023, https://www.nytimes.com/2023/09/05/us/
cop-city-atlanta-indictment.html.
7 BlackRock, “Our Actions to Advance Racial Equity and Inclusion,” June 22, 2020, https://www.
blackrock.com/corporate/about-us/social-impact/advancing-racial-equity.
8 Relman Colfax, State Street Civil Rights Audit, State Street Corporation, May 31, 2023, https://www.statestreet.com/web/about/our-people/documents/state-street-relman-civil-rights-audit.pdf,
p. 71.
9 For example, the right-wing Heritage Foundation, which authors anti-ESG model legislation,states on its website that “Diversity, equity, and inclusion; critical race theory; environmental,social, and governance” pose a “threat to our national unity and the preservation of American civicorder.” See Mike Gonzalez, “These States Are Leading the Charge in the Fight Against the Left’s
Marxist Agenda,” March 7, 2023, The Heritage Foundation, https://www.heritage.org/progressivism/
commentary/these-states-are-leading-the-charge-the-fight-against-the-lefts-marxist.
10 These anti-ESG bills use a variety of tactics including “limiting state contracting authority,
restricting pension management, forcing disclosures under threat of liability, and combatting
federal investment rules.” See Connor Gibson et al, 2023 Statehouse Report: Right-Wing Attacks
on the Freedom to Invest Responsibly Falter in Legislatures, Pleiades Strategy, https://drive.google.
com/file/d/1VJ82mMNupoFSZPQ98nLcW7AtcyBQWB18/view; Ropes & Gray, “Navigating State
Regulation of ESG,” https://www.ropesgray.com/en/sites/navigating-state-regulation-of-esg.

12 29 CFR 2550, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder
Rights,” December 1, 2022, https://www.federalregister.gov/documents/2022/12/01/2022-25783/
prudence-and-loyalty-in-selecting-plan-investments-and-exercising-shareholder-rights; Richard
Shea et al, “What ESG Investing Ruling Means For Fiduciaries,” Law360, https://www.cov.com/-/
media/files/corporate/publications/2023/10/what-esg-investing-ruling-means-for-fiduciaries.pdf;“Biden uses first veto to defend rule on ESG investing,” Reuters, March 20, 2023, https://www.
reuters.com/business/sustainable-business/biden-vetoes-resolution-block-labor-dept-rule-esg-investing-2023-03-20/.

14 Public Citizen, “New Poll: House GOP’s Anti-ESG Push to Blindfold Investors Is Deeply
Unpopular, Even Among Republicans,” December 14, 2023, https://www.citizen.org/news/new-pollhouse-gops-anti-esg-push-to-blindfold-investors-is-deeply-unpopular-even-among-republicans/.
15 Karin Rives, “States’ anti-ESG push leaves patchwork of policies, unclear mandates,” S&P
Global, August 22, 2023,
https://www.spglobal.com/marketintelligence/en/news-insights/videos/the-big-picture-energy-transition-2024.
16 Renée Boynton-Jarrett et al, “Structural integrity: Recognizing, measuring, and addressing systemic racism and its health impacts,” EClinicalMedicine, vol. 36 (2021), doi: 10.1016/j.
eclinm.2021.100921.
17 Renée Boynton-Jarrett et al, “Structural integrity: Recognizing, measuring, and addressing
systemic racism and its health impacts.”
18 Janis Bowdler and Benjamin Harris, “Racial Inequality in the United States,” U.S. Departmentof the Treasury, July 21, 2022, https://home.treasury.gov/news/featured-stories/racial-inequality-in-the-united-states. Bowdler and Harris provide a high-level overview of this history, but there
are entire fields of study devoted to these subjects.
19 Paula A. Braveman, “Systemic And Structural Racism: Definitions, Examples, Health Damages,
And Approaches To Dismantling,” Health Affairs, vol. 41, no. 2 (2022), https://www.healthaffairs.org/
doi/10.1377/hlthaff.2021.01394.
20 The Investment Integration Project, Introduction to Racial Inequity as a Systemic Risk: Why
Investors Should Care and How They Can Take Action, June 2023, https://tiiproject.com/wp-content/uploads/2023/06/TIIP-RacialEquityBrief-6-14-23-FINAL-Submitted.pdf, p. 1.
21

The Investment Integration Project, Introduction to Racial Inequity as a Systemic Risk, p. 1.

22 Jonathan W. Welburn et al., Overcoming Compound Racial Inequity Policies and Costs for
Closing the Black-White Wealth Gap, RAND Corporation, December 7, 2022, https://www.rand.
org/pubs/research_reports/RRA1259-2.html.
23 Jonathan W. Welburn et al., Overcoming Compound Racial Inequity Policies and Costs for
Closing the Black-White Wealth Gap.
24 See for example Dorothy A. Brown, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans--and How We Can Fix It (New York: Crown, 2022); Richard Rothstein, The
Color of Law: A Forgotten History of How Government Segregate America (New York: Norton,
2018); Mehrsa Baradaran, The Color of Money: Black Banks and the Racial Wealth Gap (Cambridge: Harvard University Press, 2017); Emily Flitter, The White Wall: How Big Finance Bankrupts
Black America (New York: Atria/One Signal Publishers, 2022); Terry-Ann Craigie et al, Conviction,
Imprisonment, and Lost Earnings How Involvement with the Criminal Justice System Deepens
Inequality, Brennan Center for Justice, September 15, 2020, https://www.brennancenter.org/sites/
default/files/2020-09/EconomicImpactReport_pdf.pdf.
25 Tiya Miles, “Municipal Bonds: How Slavery Built Wall Street,” The 1619 Project, https://pulitzercenter.org/sites/default/files/full_issue_of_the_1619_project.pdf#page=40.

Section 08: Endnotes

26 Robin Sidel, “A Historian’s Quest Links J.P. Morgan To Slave Ownership,” Wall Street Journal,
May 10, 2005, https://www.wsj.com/articles/SB111568595843228824; Rachel L. Swarns, “Insurance
Policies on Slaves: New York Life’s Complicated Past,” New York Times, December 18, 2016, https://www.nytimes.com/2016/12/18/us/insurance-policies-on-slaves-new-york-lifes-complicated-past.
html; Zoe Thomas, “The hidden links between slavery and Wall Street,” BBC, August 28, 2019,https://www.bbc.com/news/business-49476247.
27 Caitlin Rosenthal, Accounting for Slavery: Masters and Management (Cambridge: Harvard
University Press, 2019); Matthew Desmond, “In order to understand the brutality of American capitalism, you have to start on the plantation,” New York Times, August 14, 2019, https://www.nytimes.
com/interactive/2019/08/14/magazine/slavery-capitalism.html.
28 See for example Eric Bachman, “$70 Million Verdict Against Texas Company In Employment Discrimination Case,” Forbes, March 21, 2022, https://www.forbes.com/sites/ericbachman/2022/03/21/70-million-verdict-against-texas-company-in-employment-discrimination-case/?sh=4ca2cb72ea84; Ken Ward Jr., “How Black Communities Become “Sacrifice Zones”
for Industrial Air Pollution,” ProPublica, December 21, 2021, https://www.propublica.org/article/
how-black-communities-become-sacrifice-zones-for-industrial-air-pollution; Kimberly Adams,“Predatory practices past and present target Black investors,” Marketplace, February 10, 2023,
https://www.marketplace.org/2023/02/10/predatory-practices-past-and-present-target-black-investors/; Caroline Colvin, “Prop 22 is a racial equity battleground,” HR Dive, September 22, 2021,
https://www.hrdive.com/news/gig-work-racial-justice/607010/.
29 Cary Martin Shelby, “Racism as a Threat to Financial Stability,” Northwestern University Law
Review, vol. 118, no. 3 (2023), p. 757.
30 Jon Lukomnik and James P. Hawley, Moving Beyond Modern Portfolio Theory (New York:
Routledge, 2021). See also Freshfields Bruckhaus Deringer, A Legal Framework for Impact: Sustainability Impact in Investor Decision-Making, https://www.freshfields.us/4a199a/globalassets/
our-thinking/campaigns/legal-framework-for-impact/a-legal-framework-for-impact.pdf.
31

Lukomnik and Hawley, Moving Beyond Modern Portfolio Theory.

32 Lukomnik and Hawley, Moving Beyond Modern Portfolio Theory; John C. Coffee, Jr., “The
Future of Disclosure: ESG, Common Ownership, and Systematic Risk,” Columbia Business Law
Review, vol. 2 (2021): 602-650; Jeffrey N. Gordon, “Systemic Stewardship,” The Journal of Corporation Law, vol. 47, no. 3 (2022): 627-673.
33

Lukomnik and Hawley, Moving Beyond Modern Portfolio Theory, p. 2.

34 David Wood, “Racial Equity as a Topic for Responsible Investment: How and Why Investors
Should Engage,” Harvard Kennedy School Center for Public Leadership, https://clje.law.harvard.
edu/app/uploads/2023/03/Wood-2023-Racial-Equity-as-a-Topic-for-Responsible-Investment.pdf.
35 Wood, “Racial Equity as a Topic for Responsible Investment: How and Why Investors Should
Engage.”36 John T. Oxtoby et al., “Racial Inequality Is a Business Risk,” Chicago Booth Review, March 10,
2021, https://www.chicagobooth.edu/review/racial-inequality-business-risk; McKinsey Institute forBlack Economic Mobility “Racial equity in financial services,” September 10, 2020, https://www.
mckinsey.com/industries/financial-services/our-insights/racial-equity-in-financial-services.
37 Angela Glover Blackwell et al., The Competitive Advantage of Racial Equity, FSG and
PolicyLink, https://www.policylink.org/sites/default/files/The%20Competitive%20Advantage%20
of%20Racial%20Equity-final_0.pdf.
38 Citi GPS: Global Perspectives & Solutions, Closing the Racial Inequality Gaps: The Economic
Cost of Black Inequality in the U.S., September 2020, https://ir.citi.com/%2FPRxPvgNWu319AU1ajGf%2BsKbjJjBJSaTOSdw2DF4xynPwFB8a2jV1FaA3Idy7vY59bOtN2lxVQM%3D.
39 Ani Turner, The Business Case for Racial Equity: A Strategy for Growth, W.K. Kellogg Foundation and Altarum, 2018, https://wkkf.issuelab.org/resources/30463/30463.pdf.
40 The Investment Integration Project, Introduction to Racial Inequity as a Systemic Risk: Why
Investors Should Care and How They Can Take Action.
41 The Shareholder Commons, “System Stewardship Theory,” https://theshareholdercommons.
com/resources-page/#tsc-and-system-stewardship (accessed March 4, 2024); Jeffrey N. Gordon,“Systematic Stewardship,” Journal of Corporation Law, vol. 47, no. 3 (2022): 627-673.
42 James Hawley and Andrew Williams, “The Emergence of Universal Owners: Some Implications of Institutional Equity Ownership,” Challenges, vol. 43, no. 4 (2000): 43-61.
43 Jeffrey N. Gordon, “Systematic Stewardship.”
44 Except for Geode, which has $866 million worldwide AUM. Geode is included in this reportbecause it manages Fidelity’s entire passive investment business.
45 Majority Action analysis of data obtained from “The Largest Money Managers,” Pensions &Investments, January 12, 2023, https://www.pionline.com/crain-twi-download/1020316/field_issue_upload; The World Bank, “GDP (current US$),” https://data.worldbank.org/indicator/NY.GDP.
MKTP.CD? (accessed February 19, 2024).
46 Majority Action analysis of data obtained from “The Largest Money Managers,” Pensions &Investments.
47 Majority Action analysis of data obtained from “The Largest Money Managers,” Pensions &Investments.

Page 54

48 BlackRock, “About BlackRock in the U.S.,” https://www.blackrock.com/us/individual/aboutus/about-blackrock (accessed February 20, 2024).
49 Majority Action analysis of data obtained from “The Largest Money Managers,” Pensions &Investments; John C. Coffee, “The Future of Disclosure: ESG, Common Ownership, and SystematicRisk,” European Corporate Governance Institute - Law Working Paper 541/2020, March 16, 2021,
https://papers.ssrn.com/sol3/papers.cfm?abstract_ id=3678197, p. 3. These figures actually understate the Big Four’s presence in the public markets, since Fidelity’s passive investment business is
sub-advised by Geode, and Vanguard’s largest funds are sub-advised by Wellington. This analysis
considers Geode and Wellington separately from the Big Four, since they have their own proxy voting guidelines and their voting records differ from the asset managers whose funds they sub-advise.
50 Arnoud Boot et al, “The Controversy over Proxy Voting: The Role of Fund Managers andProxy Advisors,” Financial Analysts Journal, vol. 79, no. 4 (2023): 8-15.
51 Chong Shu, “The Proxy Advisory Industry: Influencing and Being Influenced,” Journal of
Financial Economics, forthcoming (February 8, 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3614314.
52 Ann Beth Stebbins et al, “Pass-Through Voting: Empowering Shareholders or Increasing
the Influence of Proxy Advisors?” Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates,
Skadden Podcast: The Informed Board, March 15, 2023, https://www.skadden.com/insights/
podcasts/2023/03/pass-through-voting; Lindsey Stewart, “New Proxy-Voting Options for IVV
and Other Index Funds From BlackRock, State Street, and Vanguard,” Morningstar, December
13, 2023, https://www.morningstar.com/funds/new-proxy-voting-options-ivv-other-index-fundsblackrock-state-street-vanguard. There have also been concerns about “robo-voting,” which refers
to an investment fund mechanically voting according to the advice of its proxy advisor. However,robo-voting has little influence on corporate governance since it is mostly used by small mutual
funds that control a minor percentage of voting shares. See John G. Matsusaka and Chong Shu,
“Robo-Voting: Does Delegated Proxy Voting Pose a Challenge for Shareholder Democracy?” USC
CLASS Research Paper No. 24-14 (April 12, 2023).
53 For example, both State Street and BlackRock currently allow investors exercising proxychoice to select the proxy advisors’ benchmark policies. See Stewart, “New Proxy-Voting Options
for IVV and Other Index Funds From BlackRock, State Street, and Vanguard.”
54 Clare Payn and Emma Cameron, “How racial equity audits can tackle corporate inequality,”
LGIM Blog, May 4, 2023, https://www.lgimblog.com/categories/esg-and-long-term-themes/how-racial-equity-audits-can-tackle-corporate-inequality/.
55 For more information on racial equity audits, see Laura W. Murphy, The Rationale for and
Key Elements of a Business Civil Rights Audit, October 27, 2021, https://www.civilrightsdocs.info/
pdf/reports/Civil-Rights-Audit-Report-2021.pdf; SOC Investment Group, “Racial Equity Audits:
A Critical Tool for Shareholder,” April 13, 2021, webinar, https://www.socinvestmentgroup.com/
critical-tool-for-shareholders; SOC Investment Group, “Racial Equity Audits: The Why and How ofCommunity Stakeholder Engagement,” June 29, 2022, webinar, https://www.socinvestmentgroup.
com/webinar-racial-equity-audits-the-why-and-how-of-community-stakeholder-engagement.
56 Heather C. McGhee and Sherrilyn Ifill, Toward a Vision for Racial Equity & Inclusion atStarbucks: Review and Recommendations, Demos, July 2018, https://www.demos.org/sites/default/
files/publications/Toward%20a%20Vision%20for%20Racial%20Equity%20and%20Inclusion%20
at%20Starbucks_review%20and%20Recommendations_July%202018_single.pdf.
57 The terms “racial equity audit” and “civil rights audit” are used interchangeably in this report,
but they do refer to different processes. The term “civil rights audit” captures the full range ofprotected classes under federal and state civil rights laws, including but not limited to race, sex, religion, and national origin. While Majority Action supports both processes, we prefer to use the term
“racial equity audit.” Race plays a foundational role in the history and dynamics of subjugation,
exploitation, and inequality in the U.S. We maintain that it is critical for institutions to implement
policies and processes that specifically address and redress the risks and harms caused by structural racism, while also acknowledging the intersection between race and other markers of difference.
58 Color of Change, “COC Partnership Helps Airbnb Formulate Anti-Discrimination Plans,”
February 2023, https://colorofchange.org/coc-partnership-helps-airbnb-formulate-anti-discrimination-plans; Maggie Penman et al., “#AirbnbWhileBlack: How Hidden Bias Shapes the Sharing
Economy,” NPR, April 26, 2016, https://www.npr.org/2016/04/26/475623339/-airbnbwhileblackhow-hidden-bias-shapes-the-sharing-economy; Heather Kelly, “Airbnb hosts found to discriminate against guests with ‘black’ names,” CNN Business, December 11, 2015, https://money.cnn.
com/2015/12/11/technology/airbnb-bias-harvard/.
59 Pema Levy and Tonya Riley, “Activists Couldn’t Get Facebook to Tackle Its Discrimination
Problem -- Until the Russia Scandal Hit,” Mother Jones, April 12, 2019, https://www.motherjones.
com/politics/2019/04/activists-couldnt-get-facebook-to-tackle-its-discrimination-problem-until-the-russia-scandal-hit/.
60 Starbucks was the other major corporation that conducted a racial equity audit during this period -- first in 2019, and again in 2020 and 2021. The Starbucks racial equity audit was led by former
U.S. Attorney General Eric Holder, Jr. at Covington & Burling LLP.
61 Airbnb, A Six-Year Update on Airbnb’s Work to Fight Discrimination and Build Inclusion,
December 13, 2022, https://news.airbnb.com/wp-content/uploads/sites/4/2022/12/A-Six-Year-Update-on-Airbnbs-Work-to-Fight-Discrimination-and-Build-Inclusion-12122022.pdf, p. 5.
62 Laura W. Murphy, Airbnb’s Work to Fight Discrimination and Build Inclusion: A Report
Submitted to Airbnb, Airbnb, September 8, 2016, https://mikenutterllc.com/images/uploads/REPORT_Airbnbs-Work-to-Fight-Discrimination-and-Build-Inclusion.pdf, p. 14.
63

Murphy, Airbnb’s Work to Fight Discrimination and Build Inclusion, pp. 19-25.

Section 08: Endnotes

64 Airbnb, Three Year Review — Airbnb’s Work to Fight Discrimination and Build Inclusion,
September 10, 2019, https://news.airbnb.com/wp-content/uploads/sites/4/2020/07/Airbnb_Work-to-Fight-Discrimination_0331.pdf; Airbnb, A Six-Year Update on Airbnb’s Work to Fight
Discrimination and Build Inclusion.
65

Airbnb, A Six-Year Update on Airbnb’s Work to Fight Discrimination and Build Inclusion, p. 5.

66

Airbnb, A Six-Year Update on Airbnb’s Work to Fight Discrimination and Build Inclusion, p. 9.

Page 55

86 The Travelers Companies Inc., Schedule 14A, “Item 7 – Shareholder Proposal Relating to a Racial Equity Audit,” April 8, 2022, https://www.sec.gov/Archives/edgar/
data/86312/000008631222000019/a2022proxystatement.htm. (“By contemplating that the Company take race into account in its underwriting and pricing decisions, the proposal conflicts with theCompany’s longstanding practices and would cause the Company to violate numerous insurance
laws….Taking race into account in underwriting or rate-setting, however, is unlawful under the
insurance laws of virtually every state and would improperly inject racial considerations into aheavily regulated decision-making process.”)

67 Airbnb, A Six-Year Update on Airbnb’s Work to Fight Discrimination and Build Inclusion, pp.
12-13.

87 Institutional Shareholder Services, “The Travelers Companies, Inc.,” ISS Proxy Analysis &Benchmark Policy Voting Recommendations, March 28, 2023.

68 Hayden Field, “How Airbnb failed its own anti-discrimination team—and let racial disparities
slip through the cracks,” Tech Brew, June 15, 2021, https://www.emergingtechbrew.com/stories/2021/06/15/airbnb-failed-antidiscrimination-teamand-let-racial-disparities-slip-cracks.

88 The Travelers Companies, Inc., SEC Form 10-K, February 16, 2023, https://d18rn0p25nwr6d.
cloudfront.net/CIK-0000086312/9033fd39-c5c0-4df1-b896-0283122ad20a.pdf, p. 13.

69

Majority Action analysis of data obtained from Diligent Market Intelligence.

70 PolicyLink, FSG, and JUST Capital in partnership with Paul Shoemaker, Inc., Corporate
Insights into the CEO Blueprint for Racial Equity, May 2021, https://justcapital.com/wp-content/
uploads/2021/05/Corporate-Insights-into-the-CEO-Blueprint-for-Racial-Equity.pdf, p. 10.
71

Murphy, The Rationale for and Key Elements of a Business Civil Rights Audit, p. 21.

72 Damon W. Silvers and Michael D. Thomas, “ESG: Promoting Racial Equity.” JacksonLewis,
May 16, 2023, https://www.jacksonlewis.com/insights/esg-promoting-racial-equity.
73 SOC Investment Group, “Racial Equity Audit,” https://www.socinvestmentgroup.com/
racial-equity-audit (accessed February 16, 2024). The original quote mislabeled the “Paycheck
Protection Program” as the “Payday Protection Program.”
74 Laura Murphy, The Rationale for and Key Elements of a Business Civil Rights Audit, October
2021, https://www.civilrightsdocs.info/pdf/reports/Civil-Rights-Audit-Report-2021.pdf, p. 12.

89 Consumer Federation of America, “Systemic Racism in Auto Insurance Exists and Must Be
Addressed By Insurance Commissioners and Lawmakers,” June 17, 2020, https://consumerfed.
org/press_release/systemic-racism-in-auto-insurance-exists-and-must-be-addressed-by-insurance-commissioners-and-lawmakers/; Julia Angwin et al., “Minority Neighborhoods Pay Higher
Car Insurance Premiums Than White Areas With the Same Risk,” Pro Publica and Consumer
Reports, April 5, 2017, https://www.propublica.org/article/minority-neighborhoods-higher-car-insurance-premiums-white-areas-same-risk. (“Insurance companies do not collect any information
regarding the race or ethnicity of the people they sell policies to. They do not discriminate on thebasis of race,” according to the chief actuary of the Insurance Information Institute.)
90 Julia Angwin et al., “Minority Neighborhoods Pay Higher Car Insurance Premiums ThanWhite Areas With the Same Risk.”
91 Nandita Sampath, “Racial Discrimination in Algorithms and Potential Policy Solutions,”
Consumer Reports, February 26, 2021, https://innovation.consumerreports.org/racial-discrimination-in-algorithms-and-potential-policy-solutions/.

76 Airbnb, “Fighting discrimination and building inclusion – 2022 Update,” https://www.airbnb.
com/against-discrimination, (accessed February 6, 2024).

92 Members of the 2021 Casualty Actuarial Society Race and Insurance Research Task Force, Understanding Potential Influences of Racial Bias on P&C Insurance: Four Rating Factors Explored,
Casualty Actuarial Society Research Paper Series on Race and Insurance Pricing, 2022, https://www.casact.org/sites/default/files/2022-03/Research-Paper_Understanding_Potential_Influences.
pdf; Consumer Federation of America, “Systemic Racism in Auto Insurance Exists and Must Be
Addressed By Insurance Commissioners and Lawmakers.”

77 Airbnb, “A six-year update on Airbnb’s work to fight discrimination,” Newsroom, https://news.
airbnb.com/sixyearadupdate/ (accessed February 6, 2024).

93 Urban Institute, “Credit Health during the COVID-19 Pandemic,” https://apps.urban.org/
features/credit-health-during-pandemic/.

78 Citigroup, “Action for Racial Equity,” https://www.citigroup.com/global/our-impact/diversity-equity-inclusion/action-for-racial-equity (accessed February 6, 2024). Citi’s audit did not meet
Majority Action’s criteria for a “comprehensive” racial equity audit because it was only limited to
examining the company’s ARE initiative. A comprehensive racial equity audit should include a
review of all policies, practices, and products that could have a racial equity or civil rights impact.

94 Ruha Benjamin, Race After Technology: Abolitionist Tools for the New Jim Code (Medford,
MA: Policy Press, 2019), p. vii.

79 Covington & Burling LLP, A Report to Citi: On the Progress of Citi’s Efforts to Address the
Racial Wealth Gap Through Its Action for Racial Equity, December 19, 2022, https://www.citigroup.
com/rcs/citigpa/storage/public/2022-audit-results.pdf, p. 12.

96 Julia Angwin et al., “Minority Neighborhoods Pay Higher Car Insurance Premiums ThanWhite Areas With the Same Risk.”

75

Murphy, The Rationale for and Key Elements of a Business Civil Rights Audit, p. 26.

95 Consumer Federation of America, “Systemic Racism in Auto Insurance Exists and Must Be
Addressed By Insurance Commissioners and Lawmakers.”

97

Majority Action analysis of data obtained from Diligent Market Intelligence.

98

Murphy, The Rationale for and Key Elements of a Business Civil Rights Audit, p. 20.

81 Ben Hurley, “Lack of outcomes shows organisations don’t value racial equity,” Top1000funds.
com, September 30, 2022, https://www.top1000funds.com/2022/09/lack-of-outcomes-shows-organisations-dont-value-racial-equity/.

99

Laura W. Murphy and Megan Cacace, Facebook’s Civil Rights Audit – Final Report, p. 8.

100

Murphy and Cacace, Facebook’s Civil Rights Audit – Final Report, p. 8.

82 Rachel L. Swarns, “Insurance Policies on Slaves: New York Life’s Complicated Past,” NewYork Times, December 18, 2016, https://www.nytimes.com/2016/12/18/us/insurance-policies-onslaves-new-york-lifes-complicated-past.html; Jennifer Wriggens, “The Color of Property and Auto
Insurance: Time for Change,” Florida State University Law Review, vol. 49, no. 2 (2022): 203-256.

101

Murphy and Cacace, Facebook’s Civil Rights Audit – Final Report, p. 10.

80 Laura Murphy and Meghan Cacace, Facebook’s Civil Rights Audit – Final Report, July 8, 2020,
https://about.fb.com/wp-content/uploads/2020/07/Civil-Rights-Audit-Final-Report.pdf.

83 The conventional wisdom is that every state forbids the use of race in insurance underwriting,but in actuality seventeen states do not ban its use for property/casualty insurance. See Avraham etal., “Understanding Insurance Antidiscrimination Laws,” Southern California Law Review, vol. 87,
no. 1895 (2014).

102 “JPMorgan Chase Commits $30 Billion to Advance Racial Equity,” JPMorgan Chase & Co.,
October 8, 2020, https://www.jpmorganchase.com/news-stories/jpmc-commits-30-billion-to-advance-racial-equity.
103 Emily Flitter, “Where $30 Billion to Fix Systemic Racism Actually Goes,” New York Times,
October 21, 2022, https://www.nytimes.com/2022/10/21/business/jp-morgan-racial-equity-pledge.
html.

84 Rick Swedloff, “The New Regulatory Imperative for Insurance,” Boston College Law Review,
vol. 61, no. 6 (2020): 2031-2084 (“But purely risk-based pricing might be based on undeserved or
immutable characteristics, or the riskiness might be based on historical and sociological injustices
and inequities….[Insurance] laws do not necessarily ban the use of obvious proxies to prohibitedcharacteristics—such as zip codes for race—or consider the problem of systematically higher rates
for suspect classes based on non-discriminatory characteristics— disparate impact.”); Kudakwashe
F. Chibanda, “Defining Discrimination in Insurance,” Casualty Actuarial Society, CAS Research Paper Series on Race and Insurance Pricing, 2022, https://www.casact.org/sites/default/files/2022-03/
Research-Paper_Defining_Discrimination_In_Insurance.pdf (The specific legal meaning of “disparate impact” refers to the “unintentional effect on protected classes, based on a facially neutral practice…In insurance, disparate impact is used to describe situations in which an insurance company
uses variables that are facially neutral but end up unintentionally impacting protected classes in anegative way [e.g., charging more].”).

104 JPMorgan Chase & Co., Schedule 14A, “Proposal 6: Racial equity audit and report,” April 7,
2021, https://www.sec.gov/Archives/edgar/data/19617/000001961721000275/a2021proxystatement.
htm.

85 “Facts + Statistics: Insurance company rankings – Top 10 Writers Of Property/Casualty
Insurance By Direct Premiums Written, 2022,” Insurance Information Institute, https://www.iii.org/
fact-statistic/facts-statistics-insurance-company-rankings (accessed February 13, 2024).

108 SOC Investment Group, Analysis of JPMorgan Chase Racial Equity Audit Report, December
2022, https://static1.squarespace.com/static/5d374de8aae9940001c8ed59/t/63a1b9fc55d91c55321798dd/1671543296012/JPMC_SOCIG_Analysis+of+REA+Report.pdf; Separately, see Flitter,“Where $30 Billion to Fix Systemic Racism Actually Goes” for a critique of JPMorgan’s actual $30
billion racial equity commitment.

105

Majority Action analysis of data obtained from Diligent Market Intelligence.

106 “JPMorgan Chase Engages Third-Party for Racial Equity Audit,” JPMorgan Chase & Co,
March 24, 2022, https://www.jpmorganchase.com/ir/news/2022/jpmc-engages-third-party-for-racial-equity-audit.
107 JPMorgan Chase & Co., 2022 Racial Equity Commitment Audit Report, November 22,
2022, https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/documents/2022-Racial-Equity-Commitment-Audit-Report.pdf.

Section 08: Endnotes

109

JPMorgan Chase & Co., 2022 Racial Equity Commitment Audit Report, p. 21.

110 JPMorgan Chase & Co., SEC Form PX14A6N , Notice of Exempt Solicitation by SOC Investment Group, April 18, 2023, https://www.sec.gov/Archives/edgar/data/19617/000137773923000020/
jpm23voteno.htm.
111

Majority Action analysis of data obtained from Diligent Market Intelligence.

112 United for Respect, “United for Respect at Walmart: Whose Walmart? Our Walmart,” https://united4respect.org/campaigns/walmart/ (accessed February 12, 2024).
113 U.S. Equal Employment Opportunities Commission, “EEOC Sues Walmart for Gender andRace Discrimination,” February 11, 2022, https://www.eeoc.gov/newsroom/eeoc-sues-walmart-gender-and-race-discrimination.
114 Doug McMillon, “Making a Difference in Racial Equity,” letter to Walmart associates, June
5, 2020, https://corporate.walmart.com/news/2020/06/05/making-a-difference-in-racial-equity(accessed February 11, 2024); For Arjuna Capital and Proxy Impact’s 2020, 2021, and 2022 Racial &Gender Pay Scorecards, see Arjuna Capital, “Racial & Gender Pay Scorecards,” https://arjuna-capital.com/reports/gender-pay-scorecard (accessed February 19, 2024).
115 Walmart, Culture, Diversity, Equity & Inclusion 2022 Mid-Year Report, https://corporate.
walmart.com/content/dam/corporate/documents/newsroom/2022/10/20/our-mid-year-culturediversity-equity-inclusion-report/2022-mid-year-cdei-report.pdf.
116 Matthew Boyle and Bloomberg, “Walmart is not an ideal company to work for, according to some senior Black managers,” Fortune, July 8, 2021, https://fortune.com/2021/07/08/
walmart-black-management-survey-career-development-diversity/.
117 Justin Wiltshire, Walmart is a monopsonist that depresses earnings and employment beyond
its own walls, but U.S. policymakers can do something about it, Washington Center for Equitable
Growth, March 29, 2022, https://equitablegrowth.org/walmart-is-a-monopsonist-that-depressesearnings-and-employment-beyond-its-own-walls-but-u-s-policymakers-can-do-something-about-it.
118

Wiltshire, Walmart is a monopsonist.

119 United States Government Accountability Office, Federal Social Safety Net Programs: Millions
of Full-Time Workers Rely on Federal Health Care and Food Assistance Programs, Report to the
Ranking Member - Committee on the Budget - U.S. Senate, October 2020, https://www.gao.gov/
assets/gao-21-45.pdf.
120 Peyton Bigora, “Walmart captures nearly 26% of SNAP grocery dollars,” Grocery Dive, May
19, 2023,
https://www.grocerydive.com/news/walmart-captures-nearly-26-of-snap-grocery-dollars/650742.
121 Stephan Goetz and Hema Swaminathan, “Wal-Mart and County-Wide Poverty,” Agricultural
Economics and Rural Sociology Staff Paper No. 371, Pennsylvania State University, October 18,
2004, https://aese.psu.edu/research/centers/cecd/archives/wal-mart-and-county-wide-poverty/fullstudy; Wiltshire, Walmart is a monopsonist.
122

Adam Reich, “Walmart’s Consumer Redlining,” Contexts, vol. 15, no. 4 (2016): 74-77.

123 David Merriman, “The Impact of an Urban WalMart Store on Area Businesses: The Chicago
Case,” Economic Development Quarterly, vol. 26, no. 4 (2012): 321-333.
124 Nathaniel Meyersohn, “Why Walmart is closing half its stores in Chicago,” CNN, April 13,
2023, https://www.cnn.com/2023/04/12/business/walmart-chicago-stores-closing/index.html.
125

Meyersohn, “Why Walmart is closing half its stores in Chicago.”

126 Walmart Inc., Schedule 14A, “Proposal No. 7: Racial Equity Audit,” April 20, 2023, https://www.
sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/104169/000010416923000034/wmt-20230420.
htm#i29278b5403c747518d2f07c801639294_121.
127

Walmart Inc., Schedule 14A, “Proposal No. 7: Racial Equity Audit.”

128 The Walton family owned 47 percent of Walmart common stock as of April 6, 2023. To
calculate the level of independent shareholder support, we subtracted the total number of shares
owned by the Walton family from the total number of votes cast against the proposal (Votes
Against2). We then calculated Independent Shareholder Support = Votes For ÷ (Votes For + Votes
Against2 + Abstentions). We assume the Walton family voted all their shares and voted against the
proposal. Walmart Inc., SEC Filing 8-K, June 2, 2023, https://d18rn0p25nwr6d.cloudfront.net/CIK0000104169/338e1dbb-93ec-46da-9d10-c8897d7f98a8.pdf (Showing vote results for the racial equity
audit proposal); Walmart Inc., Schedule 14A, “Proposal No. 7: Racial Equity Audit,” p. 121 (Showing
amount of common stock outstanding owned by insiders).
129 U.S. Census Bureau, “U.S. Population Projected to Begin Declining in Second Half of Century,” press release, November 9, 2023, https://www.census.gov/newsroom/press-releases/2023/
population-projections.htm.

Page 56

130 Spencer Stuart, 2023 S&P 500 New Director and Diversity Snapshot, August 2023, https://www.spencerstuart.com/-/media/2023/august/usbi2023/director_diversity/2023_new_director_-diversity_snapshot.pdf, p. 2 (Large public companies often recruit executives with CEO experience
for their boards); Korn Ferry, Insights and Lessons from Senior Black P&L Leaders in Corporate
America, 2019, https://www.kornferry.com/content/dam/kornferry/docs/pdfs/korn-ferry_theblack-pl-leader.pdf, p 7 (Black executives are more likely to be funneled into “functional roles” (headof human resources, director of corporate social responsibility, chief diversity officer) that do notlead to a CEO position. This in turn limits the pool of Black candidates who are seen as qualified
to serve on corporate boards); Eric Bachman, “The ‘Glass Ceiling’ For Black Corporate Executives Is Really A ‘Concrete Ceiling,’” Forbes, December 16, 2021, https://www.forbes.com/sites/
ericbachman/2021/12/16/theglass-ceiling-for-black-corporate-executives-is-really-a-concrete-ceiling/?sh=7ab598c2364a.
131 Lisa Fairfax, “Racial Reckoning with Economic Inequities: Board Diversity as a Symptom anda Cure,” Cornell Law Review Online 68, no. 106 (2022): 68-90, https://scholarship.law.upenn.edu/
cgi/viewcontent.cgi?article=3880&context=faculty_scholarship, p. 74.
132 Wei Cai et al., “Do Diverse Directors Influence DEI Outcomes?,” September 28, 2022, https://
dx.doi.org/10.2139/ssrn.4232434.
133 Vontobel, “Race, Role Models and the Future,” Turning Stones Blog, June 29, 2020, https://am.vontobel.com/en/insights/race-role-models-and-the-future; The Carlyle Group, From
Impact Investing to Investing for Impact, February 2020, https://www.carlyle.com/sites/default/
files/2020-02/From%20Impact%20Investing%20to%20Investing%20for%20Impact_022420.pdf, p.
5; Niclas L. Erhardt et al., “Board of Director Diversity and Firm Financial Performance,” Corporate
Governance: An International Review, Vol. 11, Issue 2 (2003): pp. 102-111, https://onlinelibrary.wiley.
com/doi/abs/10.1111/1467-8683.00011; McKinsey & Company, Delivering through Diversity, January
2018, https://www.insurance.ca.gov/diversity/41-ISDGBD/GBDExternal/upload/McKinseyDeliverDiv201801-2.pdf, p. 4.
134 PricewaterhouseCoopers, Magnet for Talent: Managing Diversity as a Reputational Risk andBusiness Opportunity, 2017, https://www.pwc.co.uk/human-resource-services/assets/documents/
diversity-and-inclusion-reputation-2017.pdf, p. 4; Merritt Melancon, “America’s economy continued
to grow and diversify while recovering from COVID-19,” University of Georgia Terry College ofBusiness, June 6, 2023, https://www.terry.uga.edu/americas-economy-continued-grow-and-diversify-while-recovering-covid-19.
135 Chris Brummer and Leo E. Strine, Jr., “Duty and Diversity,” Vanderbilt Law Review, Vol. 75,
Issue 1 (2022), https://scholarship.law.vanderbilt.edu/cgi/viewcontent.cgi?article=4795&context=vlr,
p. 36.
136 Gregory H. Shill and Matthew L. Strand, “Diversity, ESG, and Latent Board Power,” Delaware
Journal of Corporate Law, Vol. 46, Issue 2 (2022): 255-323, https://djcl.org/wp-content/uploads/2022/10/Diversity-ESG-and-Latent-Board-Power-Gregory-Shill-Matthew-Strand-46.2.pdf, p.
317.
137 BlackRock Investment Stewardship, Global Principles, effective January 2023, https://www.
documentcloud.org/documents/24233674-blk-responsible-investment-engprinciples-global, p. 8.
138 Michael Grothaus, “These 17 companies are pledging to add a Black board member by the endof 2021,” Fast Company, September 9, 2020, https://www.fastcompany.com/90548491/these-17companies-are-pledging-to-add-a-black-board-member-by-the-end-of-2021; “The Board Challenge
Launches Pledge for Companies to Add a Black Director to their Boards,” Black Enterprise,
September 9, 2020, https://www.blackenterprise.com/the-board-challenge-launches-pledge-forcompanies-to-add-a-black-director-to-their-boards/.
139

Majority Action analysis of data obtained from ISS ESG.

140

Spencer Stuart, 2023 S&P 500 New Director and Diversity Snapshot, p. 10.

141

Spencer Stuart, 2023 S&P 500 New Director and Diversity Snapshot, p. 10.

142 Spencer Stuart, 2023 S&P 500 New Director and Diversity Snapshot, p. 11; Jeff Green, “Black
Directors Lose Ground in Boardrooms, Reversing Progress,” Bloomberg, August 9, https://www.
bloomberg.com/news/articles/2023-08-09/us-companies-slow-progress-in-recruiting-black-directors-to-boards.
143

Spencer Stuart, 2023 S&P 500 New Director and Diversity Snapshot, p. 12.

144

Spencer Stuart, 2023 S&P 500 New Director and Diversity Snapshot, p. 3.

145 Jeffrey McKinney, “Black Boardroom Power 2022: Momentum to Increase Black Directors
Continues but Challenges to Significantly Boost Black Corporate Leadership Persists,” BlackEnterprise, September 26, 2022, https://www.blackenterprise.com/black-boardroom-2022-momentum-to-increase-black-directors-continues-but-challenges-to-significantly-boost-black-corporate-leadership-persists/.
146 Deloitte and Alliance for Board Diversity, Missing Pieces Report: A board diversity census of
women and underrepresented racial and ethnic groups on Fortune 500 boards, 7th edition, June
2023, https://www2.deloitte.com/content/dam/Deloitte/us/Documents/us-missing-pieces-7thedition-report.pdf, p. 6.
147 Merel Spierings, Corporate Boards Are More Diverse Than Ever, But the Pace of Growth Is
Slowing, The Conference Board, November 20, 2023, https://www.conference-board.org/publications/corporate-boards-are-more-diverse-but-pace-of-growth-is-slowing.

Section 08: Endnotes

148 Ufonobong Umanah and Andrew Ramonas, “California Board Diversity Law Violates Federal
Constitution,” Bloomberg Law, May 17, 2023, https://news.bloomberglaw.com/us-law-week/california-board-diversity-law-violates-federal-constitution; Alliance for Fair Board Recruitment v. Weber,Docket No. 2:21-cv-01951 (E.D. Cal. Oct 21, 2021), Court Docket, https://www.govinfo.gov/content/
pkg/USCOURTS-caed-2_21-cv-01951/pdf/USCOURTS-caed-2_21-cv-01951-12.pdf.
149 Martin Lipton, “DEI Initiatives Post-SFFA: Considerations for Boards and Management,”
Harvard Law School Forum on Corporate Governance, August 9, 2023, https://corpgov.law.harvard.
edu/2023/08/09/dei-initiatives-post-sffa-considerations-for-boards-and-management/; Jody
Godoy and Disha Raychaudhuri, “Some companies alter diversity policies after conservatives’ lawsuit threat,” Reuters, December 18, 2023, https://www.reuters.com/business/some-companies-alter-diversity-policies-after-conservatives-lawsuit-threat-2023-12-18/.
150 National Bureau of Economic Research, The Big Three and Board Gender Diversity: The
Effectiveness of Shareholder Voice, National Bureau of Economic Research, April 2023, https://www.nber.org/system/files/working_papers/w30657/w30657.pdf, p. 38.
151

National Bureau of Economic Research, The Big Three and Board Gender Diversity, p. 4.

152

Majority Action analysis of data obtained from ISS ESG.

153 JPMorgan Asset Management, Global proxy voting guidelines: North America, Europe, Middle
East, Africa, Central America, South America, and Asia, April 2023, https://www.documentcloud.
org/documents/24233662-jpmorgan-global-proxy-voting-guidelines-2023-redline?responsive=1&title=1, p. 25.
154 Morgan Stanley Investment Management, Equity Proxy Voting Policy and Procedures, March
1, 2023, https://www.documentcloud.org/documents/24233673-morgan-stanley-voting-policy-2023,
p.4.
155 ISS Governance, Proxy Voting Guidelines Benchmark Policy Recommendations: UnitedStates, effective February 1, 2023, December 13, 2022, https://www.documentcloud.org/documents/24238428-iss-us-voting-guidelines?responsive=1&title=1, p. 12.
156 For more on our methodology for determining the racial and ethnic composition of corporateboards, see Appendix A.
157

Majority Action analysis of data obtained from Diligent Market Intelligence.

158 Nuveen, “Key proxy vote rationales for 2022-2023,” Directors, https://www.nuveen.com/en-us/
insights/responsible-investing/proxy-vote-rationales, (accessed February 10, 2023).
159 Goldman Sachs Asset Management, Policy, Procedures, and Guidelines for Goldman Sachs
Asset Management’s Global Proxy Voting: 2023 Edition, March 2023, https://www.documentcloud.
org/documents/24233661-goldman-sachs-voting-policy-2023, p. 6..
160 Caesars Entertainment, Inc., 2023 Annual Meeting of Shareholders & Proxy Statement, April
17, 2023, https://investor.caesars.com/static-files/e23c48fb-3809-4d42-aa01-63def3f38ab1, p. 6 andp. 14.
161 Chubb Ltd., Invitation and Proxy Statement for the 2023 Annual General Meeting of Shareholders, May 17, 2023, https://s201.q4cdn.com/471466897/files/doc_downloads/annualmeetingmat/2023/Chubb-2023-Proxy-Statement.pdf, p. 23 and p. 70; Dover Corporation, 2023 Proxy, March
17, 2023, https://investors.dovercorporation.com/static-files/fde7aaf5-fd23-416c-b06f-1308145a6802,
p. 7.
162

Majority Action analysis of data obtained from ISS ESG.

163 Lisa Fairfax, “Racial Reckoning with Economic Inequities: Board Diversity as a Symptom anda Cure,” Cornell Law Review Online 68, no. 106 (2022): 68-90, https://scholarship.law.upenn.edu/
cgi/viewcontent.cgi?article=3880&context=faculty_scholarship, pp. 76-77.
164

Majority Action analysis of data obtained from ISS ESG.

165 Analysis does not include Franklin Templeton, since each Franklin Templeton subsidiary has
different proxy voting policies.
166 The nominating committee is responsible for identifying and recommending potential director nominees, ensuring diverse board composition, and reviewing the structure of the board and its
various committees. Voting against nominating committee members is one way shareholders canhold companies accountable for deficiencies in board composition.
167 Vanguard, Proxy voting policy for U.S. portfolio companies, February 1, 2023, https://corporate.
vanguard.com/content/dam/corp/advocate/investment-stewardship/pdf/policies-and-reports/
us_proxy_voting_2023.pdf.
168 Vanguard, Proxy voting policy for U.S. portfolio companies, February 2024, https://corporate.
vanguard.com/content/dam/corp/advocate/investment-stewardship/pdf/policies-and-reports/
us_proxy_voting_policy_2024.pdf.
169 Adam Lioz, “Stacked Deck: How the Racial Bias in Our Big Money Political System Undermines Our Democracy and Our Economy,” Demos, July 23, 2015, https://www.demos.org/research/
stacked-deck-how-racial-bias-our-big-money-political-system-undermines-our-democracy-and.
170 Center for Political Accountability, Corporate Enablers: Who Are the Leading Bankrollersof Voter Suppression Legislation?, July 13, 2021, https://www.politicalaccountability.net/wp-content/uploads/2021/10/Corporate-Enablers.pdf; Center for Political Accountability, Conflicted
Consequences: A Graphic Study on How Public Company Political Money Has Reshaped State
and National Politics from 2010 to Today, July 21, 2020, https://politicalaccountability.net/hifi/files/
Conflicted-Consequences.pdf.

Page 57

171 David Pomerantz, “Getting Politics Out of Utility Bills: How policymakers can protect customers from being forced to fund utilities’ political machines” Energy and Policy Institute, January 2023,
https://energyandpolicy.org/wp-content/uploads/2023/01/Getting-Politics-Out-of-Utility-Bills.pdf;
Emily Flitter, “Frustrated With New Rules Bank Lobbyists Are Making Their Fight Public,” NewYork Times, November 2, 2023, https://www.nytimes.com/2023/11/02/business/bank-lobbyists-regulators-cfpb.html; David A. Fahrenthold and Talmon Joseph Smith, “How Restaurant Workers
Help Pay for Lobbying to Keep Their Wages Low,” New York Times, January 17, 2023, https://www.
nytimes.com/2023/01/17/us/politics/restaurant-workers-wages-lobbying.html; Greenpeace USA,
Dollars vs. Democracy: Inside the Fossil Fuel Industry’s Playbook to Suppress Protest and Dissent
in the United States, October 2023, https://www.greenpeace.org/usa/wp-content/uploads/2023/10/
Dollars-vs-Democracy-Report-2023.pdf; Zak Cassel and Rose Adams, “Opposing PRO Act, Uberand Other Gig Companies Spend Over $1 Million Lobbying Congress,” The Intercept, May 6, 2021,
https://theintercept.com/2021/05/06/pro-act-uber-lyft-doordash-instacart-lobbying/.
172 Inti Pacheco and Stephanie Stamm, “What CEOs Said About George Floyd’s Death,” The
Wall Street Journal, June 5, 2020, https://www.wsj.com/articles/what-executives-said-about-georgefloyds-death-11591364538.
173 Center for Political Accountability, Corporate Underwriters and the Democracy Gap: How
Company Political Spending Has Reshaped State Politics and Created Serious Risks for Companies, Shareholders and our Democracy, December 21, 2023, https://www.politicalaccountability.net/
wp-content/uploads/2023/12/Corporate-Underwriters-and-the-Democracy-Gap.pdf.
174 Livni et al., “After the Capitol Attack, Companies Pledged to Rethink Political Giving. Did
They?”; Marritz, “When GOP Attorneys General Embraced Jan. 6, Corporate Funders Fled. Now
They’re Back.”; Emily Birnbaum, Megan Wilson, and Hailey Fuchs, “These companies stopped
campaign donations to election objectors. Their lobbyists did not,” Politico, February 15, 2022,
https://www.politico.com/news/2022/02/15/jan-6-lobbying-companies-election-00008827.
175 For more on the shortcomings of state disclosure laws, see Open Secrets, State Lobbying
Disclosure: A Scorecard, June 28, 2022, https://www.opensecrets.org/news/reports/layers-of-lobbying/lobbying-scorecard.
176 Dorothy S. Lund and Leo E. Strine, Jr., “Corporate Political Spending is Bad Business,” Harvard
Business Review, January-February 2022, https://hbr.org/2022/01/corporate-political-spending-is-bad-business.
177 Maria Aspan, “Big Business courted big controversies in the 2022 midterm elections. Were thereturns on their political donations worth the risks?” Fortune, November 19, 2022, https://fortune.
com/2022/11/19/midterm-elections-congress-political-donations-business-corporate-pacs/.
178 Throughout this report, the terms “corporate political influence” and “corporate political transparency” are used to encompass a corporation’s political spending as well as lobbying activities.
179 Leo E. Strine, Jr., “Fiduciary Blind Spot: The Failure of Institutional Investors to Prevent the
Illegitimate Use of Working Americans’ Savings for Corporate Political Spending,” Washington University Law Review, vol. 97, no. 4 (2020), https://journals.library.wustl.edu/lawreview/article/2798/
galley/19631/view/. (“Because] Worker Investors are dependent on real, sustainable economic
growth, they are harmed when businesses use the political process to engage in rent-seeking toprotect their industries against competition from other competitors with cleaner, more responsible
ways of making money, or to hold off efforts by regulators to make them reduce the externalities
they generate. Corporate political spending that benefits particular competitors to the disadvantage
of others does not benefit diversified investors; it retards sustainable growth and market competition. One good example of this phenomenon is political spending designed to influence society toelect candidates who deny science and the relationship between carbon use and climate change.
That kind of influence peddling is designed to perpetuate large subsidies granted to traditional energy companies, and to thereby retard the growth of new businesses that generate energy in a waythat uses less carbon and produces less pollution. Not only does this rent-seeking privilege ossified
businesses of the past over dynamic businesses with brighter prospects, it subjects our economy,
and thus diversified investors, to the huge economic and social costs that will come from a failure
to keep climate change within bounds.” pp. 1034-35)
180 State Street only voted on five political spending disclosure proposals. It abstained fromvoting on the proposal at Caesars Entertainment, which does not count abstentions when it comesto shareholder proposals.
181

Majority Action analysis of data obtained from Diligent Market Intelligence.

182 Sustainable Investments Institute, “The Corporate State Lobbying Black Hole,” December
2023, https://www.citizen.org/wp-content/uploads/Corporate_State_Lobbying_Black_Hole_Report_2023.pdf; The Ezra Klein Show, “There’s Been a Massive Change in Where American Policy
Gets Made,” NewYork Times, December 6, 2022, https://www.nytimes.com/2022/12/06/opinion/ezra-klein-podcast-jacob-grumbach.html.
183 Does not include proposals on climate-focused lobbying alignment. There were two climate-focused lobbying alignment proposals voted on in 2023 – one at Amazon which received 24
percent support and one at Meta which received 10 percent support. The low level of support for
the Meta proposal can partially be explained by the company’s dual-class structure, under which
Mark Zuckerburg exercises control over 60 percent of voting shares (as of March 31, 2023).
184 Anna Massoglia and Keith Newell, “Election objectors in Congress received more than $61
million from corporate PACs and industry trade groups in the 2022 cycle,” Open Secrets, November
14, 2022, https://www.opensecrets.org/news/2022/11/election-objectors-in-congress-received-morethan-61-million-from-corporate-pacs-and-industry-trade-groups-in-the-2022-cycle/.
185 OpenSecrets, “Client Profile: Eli Lilly & Co.,”, https://www.opensecrets.org/federal-lobbying/clients/bills?cycle=2023&id=D000000166 and https://www.opensecrets.org/federal-lobbying/clients/lobbyists?cycle=2023&id=D000000166 (accessed January 23, 2024).

Section 08: Endnotes

186 OpenSecrets, “Client Profile: Pharmaceutical Research & Manufacturers of America,” 2022,
https://www.opensecrets.org/federal-lobbying/clients/lobbyists?cycle=2022&id=d000000504(accessed January 2024).
187 Pharmaceutical Research and Manufacturers of America, “Our Mission,” https://phrma.org/
About (accessed January 23, 2024); Brandon Lee, “HEALTH CARE BRIEFING: Lobbying Hits High
Amid Drug Pricing Fight,” Bloomberg Government, https://about.bgov.com/news/health-care-briefing-lobbying-hits-high-amid-drug-pricing-fight/ (accessed January 21, 2022); OpenSecrets, “Client
Profile: Pharmaceutical Research & Manufacturers of America,” 2021, https://www.opensecrets.org/
federal-lobbying/clients/summary?cycle=2021&id=d000000504 (accessed February 4, 2024); Sheryl
G. Stolberg and Rebecca Robins, “Drugmakers Are ‘Throwing the Kitchen Sink’ to Halt Medicare
Price Negotiations,” New York Times, July 23, 2023, https://www.nytimes.com/2023/07/23/us/politics/medicare-drug-price-negotiations-lawsuits.html.
188 Action Center on Race and the Economy, Poison: How Big Pharma’s Racist Price
Gouging Kills Black and Brown Folks, August 2020, https://acrecampaigns.org/wp-content/uploads/2020/08/POISON-FINAL-DRAFT.pdf, p. 6.
189 The White House, “FACT SHEET: How the Inflation Reduction Act Helps Black Communities,” August 16, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/16/fact-sheet-how-the-inflation-reduction-act-helps-black-communities/.
190 Amy Martin, “States Are Trying to Cap the Price of Insulin. Pharmaceutical Companies
Are Pushing Back,” NBC News, August 15, 2020, https://www.nbcnews.com/news/us-news/
states-are-trying-cap-price-insulin-pharmaceutical-companies-are-pushing-n1236766.
191 Monica E Peek, “By Any Means Necessary: Why Lowering Insulin Prices Is Relevant to Racial
Health Equity,” The Lancet, vol. 398, no. 10313 (November 13, 2021), https://www.thelancet.com/
journals/lancet/article/PIIS0140-6736(21)02315-1/fulltext.
192 Eli Lilly and Company, Schedule 14A, “Item 6: Proposal to Disclose Direct and Indirect Lobbying Activities and Expenditures,” March 19, 2021, https://investor.lilly.com/static-files/89713abce83f-4845-a756-520a8b2ade2c; Eli Lilly and Company, Schedule 14A, “Item 8. Proposal to Publish
an Annual Report Disclosing Lobbying Activities,” March 18, 2022, https://investor.lilly.com/
static-files/36eb6ad1-494d-4981-913e-8ec46733446f; Eli Lilly and Company, Schedule 14A, “Item7: Proposal to Publish an Annual Report Disclosing Lobbying Activities,” March 17, 2023, https://investor.lilly.com/static-files/d2bd831b-feb1-405e-8957-37668f235374.
193 “Minnesota CEOs join Children’s Minnesota in response to recent tragedy,” PR Newswire,
May 28, 2020, https://www.prnewswire.com/news-releases/minnesota-ceos-join-childrens-minnesota-in-response-to-recent-tragedy-301067465.html.
194 The Corporate Accountability Black Collective, “Wells Fargo’s racist history and the callfor reparations,” Corporate Accountability, June 16, 2022, https://corporateaccountability.org/
blog/wells-fargo-call-for-reparations/; Hugh Son, “Regulators caught Wells Fargo, other banks
in probe over mortgage pricing discrimination,” CNBC, December 11, 2023, https://www.cnbc.
com/2023/12/11/wells-fargo-mortgage-lenders-probed-over-racial-discrimination.html.
195 “Overdraft and Nonsufficient Fund Fees: Insights from the Making Ends Meet Survey
and Consumer Credit Panel,” Consumer Finance Protection Bureau, CFPB Office of Research
Publication No. 2023-9, December 2023, https://files.consumerfinance.gov/f/documents/cfpb_overdraft-nsf-report_2023-12.pdf (accessed January 24, 2024); UnidosUS, How to Protect Working
Class and Latino Consumers from Junk Fees, June 8, 2023, https://unidosus.org/wp-content/uploads/2023/06/unidosus_junkfeestestimony.pdf (Testimony submitted to the House Subcommittee on Consumer Protection, Product Safety and Data Security.)
196 Accountable.US, In 2023, The 10 Megabanks That Still Charge Overdraft Fees Raked In Over$2.3 Billion In Overdraft Revenue, As The CFPB Plans Rulemaking Cracking Down On These
Exploitative Fees, January 8, 2024, https://accountable.us/wp-content/uploads/2024/01/2024-0108-Research-on-Top-10-Overdraft-Banks-FINAL.docx.pd.
197 Offices of Consumer Populations and Markets, “Overdraft/NSF revenue down nearly 50%
versus pre-pandemic levels,” Consumer Financial Protection Bureau, May 24, 2023, https://www.
consumerfinance.gov/data-research/research-reports/data-spotlight-overdraft-nsf-revenue-in-q42022-down-nearly-50-versus-pre-pandemic-levels/full-report/.
198 Financial Health Network, The FinHealth Spend Report 2021: What Financially Coping
and Vulnerable Americans Pay for Everyday Financial Services, April 2021, https://cfsi-innovation-files-2018.s3.amazonaws.com/wp-content/uploads/2021/04/19180204/FinHealth_Spend_Report_2021.pdf.
199 The American Legislative Exchange Council (ALEC) is an organization that brings together
conservative lawmakers and corporate interests to advance model legislation focused on racist andwhite supremacist policies, including “Stand Your Ground” laws and restrictions on voting rights.
ALEC has and continues to receive large contributions from industry trade associations and corporations. See Ed Pilkington, “Rightwing ‘bill mill’ accused of sowing racist and white supremacist
policies,” The Guardian, December 3, 2019, https://www.theguardian.com/us-news/2019/dec/02/
alec-white-supremacy-conservatives-racism; Diamond Brown and Robert Maguire, “Weak disclosure laws allow corporations to bankroll ALEC with no accountability,” Citizens for Responsibility
and Ethics in Washington, November 30, 2023, https://www.citizensforethics.org/news/analysis/weak-disclosure-laws-allow-corporations-to-bankroll-alec-with-no-accountability/; Representative Sean Casten, “Casten Statement on Responses from Wells Fargo, JPMorgan Regarding SFOF
Sponsorship,” November 15, 2022, https://casten.house.gov/media/press-releases/casten-statement-responses-wells-fargo-jpmorgan-regarding-sfof-sponsorship; Karin Rives, “‘Strong, State-based
Network’ Fuels Opposition to ESG Investment.” S&P Global Market Intelligence, January 23, 2023,
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/strong-statebased-network-fuels-opposition-to-esg-investment-73312994.

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200 David Gelles, “How Republicans Are ‘Weaponizing’ Public Office Against Climate Action,”
The New York Times, August 5, 2022, https://www.nytimes.com/2022/08/05/climate/republican-treasurers-climate-change.html; Alaska Commissioner of Revenue Adam Crum and Arizona
Treasurer Kimberly Lee, letter to BlackRock Chairman/CEO Larry Fink, May 15, 2023, https://sfof.
com/wp-content/uploads/2023/05/AssetManagerLetter_BLACKROCK.pdf.
201 Judd Legum, “Behind the Curtain of Wells Fargo’s Corporate PAC,” Popular Information, June30, 2022, https://popular.info/p/behind-the-curtain-of-wells-fargos.
202

Legum, “Behind the Curtain of Wells Fargo’s Corporate PAC.”

203 Anna Massoglia and Keith Newell, “Election Objectors in Congress Received More than $61
Million from Corporate PACs and Industry Trade Groups in the 2022 Cycle.” OpenSecrets, November 14, 2022, https://www.opensecrets.org/news/2022/11/election-objectors-in-congress-receivedmore-than-61-million-from-corporate-pacs-and-industry-trade-groups-in-the-2022-cycle.
204 OpenSecrets, “527 Search: By Donor Name,” August 15, 2016, https://www.opensecrets.
org/527s/lookup.php?donor=wells+fargo&type=d&submit=Go%21, accessed January 23, 2024.
205 Judd Legum and Rebecca Crosby, “Corporations Donated More than $35.6 Million toElection Deniers,” Popular Information, October 17, 2022, https://popular.info/p/corporations-donated-more-than-356; Walker Bragman and Andrew Perez, “Corporations Kept Bankrolling The
Campaign Against Voting Rights,” Lever News, May 26, 2021, https://www.levernews.com/corporations-kept-bankrolling-the-campaign-against-voting-rights; Julia Manchester, “Virginia GOP Seizes
on Education as Governor’s Race Nears Finish Line,” The Hill, October 8, 2021, https://thehill.com/
homenews/campaign/575848-virginia-gop-seizes-on-education-as-governors-race-nears-finishline; Ilya Marritz, “When GOP Attorneys General Embraced Jan. 6, Corporate Funders Fled. Now
They’re Back,” ProPublica, April 20, 2023, https://www.propublica.org/article/raga-gop-jan6-amazon-walmart-comcast-contributions#:~:text=In%20all%2C%20RAGA%20spent%20at,according%20to%20data%20from%20AdImpact.
206 Jules Roscoe, “eBay Violated Labor Law Trying to Bust Its First Union, NLRB Finds,” VICE,
December 19, 2023, https://www.vice.com/en/article/4a38nq/austin-gave-poor-families-a-basic-income-it-changed-their-lives.
207 Economic Policy Institute, “Unions help reduce disparities and strengthen our democracy,” fact sheet, April 23, 2021, https://www.epi.org/publication/unions-help-reduce-disparities-and-strengthen-our-democracy/ (accessed February 2, 2024).
208 Center for Economic and Policy Research, Union Advantage for Black Workers, February
2014, https://cepr.net/documents/black-union-2014-02.pdf, p. 3.
209 International Labour Organization, “8. Freedom of Association and Collective Bargaining,”
Decent work for sustainable development (DW4SD) Resource Platform - Thematic Areas, https://www.ilo.org/global/topics/dw4sd/themes/freedom-of-association/lang--en/index.htm, (accessed
February 3, 2024).
210 Communications Workers of America, Strategic Organizing Center, and NAACP, Calling for
Justice: Racial Inequity at the Largest Federal Call Center Contractor, March 2023, https://cwaunion.org/sites/default/files/2023-03/202303_Federal_Contracting_Racial_Equity.pdf.
211 Cornell University ILR School, “Labor Action Tracker,” Cornell University, https://striketracker.
ilr.cornell.edu/, accessed February 4, 2024. The Labor Action Tracker is a collaboration between theCornell University ILR School and the University of Illinois LER School.
212 “The Big Wins by Unions in 2023,” The Wall Street Journal, December 11, 2023, https://www.
wsj.com/economy/jobs/the-big-wins-by-unions-in-2023-cecdfc3a.
213 Office of Public Affairs, “Unfair Labor Practices Charge Filings Up 10%, Union Petitions Up
3% in Fiscal Year 2023,” National Labor Relations Board, October 13, 2023, https://www.nlrb.gov/
news-outreach/news-story/unfair-labor-practices-charge-filings-up-10-union-petitions-up-3-in-fiscal, accessed February 2, 2024.
214 Steven Greenhouse, “How Corporations Crush New Unions,” The New Republic, December 18, 2023, https://newrepublic.com/article/177557/trader-joes-union-busting-bargaining-table-first-contract; Steven Greenhouse, “‘Old-school union busting’: how US corporations arequashing the new wave of organizing,” The Guardian, February 26, 2023, https://www.theguardian.
com/us-news/2023/feb/26/amazon-trader-joes-starbucks-anti-union-measures.
215 Economic Policy Institute, Unlawful: U.S. employers are charged with violating federal law in
41.5% of all union election campaigns, December 11, 2019, https://files.epi.org/pdf/179315.pdf, p. 18.
216 Justin McCarthy, “U.S. Approval of Labor Unions at Highest Point Since 1965,” Gallup, August30, 2022, https://news.gallup.com/poll/398303/approval-labor-unions-highest-point-1965.aspx; Katie
Hicks and Alyssa Meyers, “Anti-union stances can affect brand sentiment, study shows,” Marketing
Brew, February 22, 2022, https://www.marketingbrew.com/stories/2022/02/22/anti-union-stancescan-affect-brand-sentiment-study-shows.
217 Katie Bach and Molly Kinder, “Is your business struggling with the labor shortage? Consider aunion,” The Brookings Institution, December 14, 2021, https://www.brookings.edu/articles/is-yourbusiness-struggling-with-the-labor-shortage-consider-a-union/.
218 Erling Barth et al., “Union Density Effects on Productivity and Wages,” The Economic Journal,
vol. 130, no. 631 (2020): 1989-1936; Elin Svarstad and Fredrik B. Kostol, “Unions, collective agreements and productivity: A firm-level analysis using Norwegian matched employer-employee panel
data,” British Journal of Industrial Relations, vol. 60, no. 4 (December 2022): 864-894.

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219 Trillium Asset Management, The Investor Case for Supporting Worker Organizing Rights:
How should different stakeholders, such as investors, think about and react to union formations?,
July 2022, https://assets-global.website-files.com/5ecd0982c9d00e2865ce6691/6373f1af20fe112a4cf3cc38_The%20Investor%20Case%20for%20Supporting%20Worker%20Organizing%20Rights%20
7-20-22.pdf; Committee on Workers’ Capital, Shared Prosperity: The Investor Case for Freedomof Association and Collective Bargaining, November 2022, https://share.ca/wp-content/uploads/2022/11/CWC-Shared-Prosperity-Report.pdf.

238 Glass Lewis, 2023 Policy Guidelines: ESG Initiatives, https://www.documentcloud.org/
documents/24253672-glass-lewis-esg-initiatives-voting-guidelines-2023#document/p39/a2419800,
pp. 37-38.

220 For more on how supporting labor rights can help to mitigate the systemic risks of inequality,
see “Why and How Investors Can Respond to Income Inequality,” 2018, https://www.unpri.org/
download?ac=5599#.

240 ISS Governance, Proxy Voting Guidelines Benchmark Policy Recommendations: UnitedStates, effective February 1, 2023, December 13, 2022, https://www.documentcloud.org/documents/24238428-iss-us-voting-guidelines?responsive=1&title=1, p. 69.

221 Committee on Workers’ Capital, Voting for Labour Rights: How the World’s Largest AssetManagers Measured Up in Proxy Season 2023, November 30, 2023, https://www.workerscapital.
org/wp-content/uploads/2024/01/CWC-Voting-for-Labour-Rights-2023.pdf. This report provides amore detailed analysis of how the largest asset managers voted on proposals related to labor rights,
particularly how U.S.-based asset managers stacked up against their non-U.S.-based counterparts.

241 LGIM, 2023 – North America Corporate Governance and Responsible Investment Policy, May
2023, https://www.documentcloud.org/documents/24250216-legal-general-north-america-governance-policy-may-2023#document/p46/a2419128, p. 46.

222 Starbucks Workers United, “Our Proposals,” https://sbworkersunited.org/proposal-update,
accessed February 2, 2024.
223 Union Election Data, “Current Starbucks Union Election Stats,” ,January 31, 2024, https://
unionelections.org/data/starbucks/, accessed February 3, 2024.

239 Goldman Sachs Asset Management, Policy, Procedures and Guidelines for Goldman Sachs
Asset Management’s Global Proxy Voting: 2023 Edition, March 2023, https://www.documentcloud.
org/documents/24233661-goldman-sachs-voting-policy-2023?responsive=1&title=1, p. 32.

242 Analysis does not include Franklin Templeton, since each Franklin Templeton subsidiary has
different proxy voting policies.
243 This analysis is limited to policy language that articulates a minimum diversity expectation
for racial and ethnic board diversity and director accountability (in the form of opposing the reelection of one or more directors) if that expectation is not met. We do not examine policy language
related to board gender diversity, board diversity disclosures, or the benefits of board diversity moregenerally.

224 Parker Purifoy, “Starbucks Illegally Kept Wages, Benefits From Union Workers,” Bloomberg
Law, September 28, 2023, https://news.bloomberglaw.com/daily-labor-report/starbucks-illegallykept-pay-benefits-raise-from-union-workers.

244 Amundi, Voting Policy 2023, https://www.documentcloud.org/documents/24233665-amundi-voting-policy-2023.

225 Parker Purifoy, “Starbucks Ordered to Rehire Two Illegally Fired Union Organizers,”
Bloomberg Law, February 9, 2024, https://news.bloomberglaw.com/daily-labor-report/starbucks-ordered-to-rehire-two-illegally-fired-union-organizers.

245 BlackRock, BlackRock Investment Stewardship: Proxy voting guidelines for U.S. securities,
January 2023, https://www.documentcloud.org/documents/24233675-blk-responsible-investment-guidelines-us?responsive=1&title=1, p. 8.

226 Starbucks Corporation, SEC Filing 10-K, October 3, 2021, https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0000829224/000082922421000086/sbux-20211003.htm, p. 19.

246 BlackRock, BlackRock Investment Stewardship: Proxy voting guidelines for U.S. securities,
p. 9.

227 Trillium Asset Management et al., “Re: Starbucks’ Commitment to Upholding International
Labor Standards,” Letter to Mellody Hobson, Independent Chair of the Board of Directors and
Kevin Johnson, CEO, March 15, 2022, https://www.trilliuminvest.com/documents/sbux-investorletter-march-15-2022-public; Jeff Green and Leslie Patton, “Starbucks Says It Won’t Enter Labor
Neutrality Agreement With Unionizing Workers,” Bloomberg, March 23, 2023, https://www.
bloomberg.com/news/articles/2023-03-23/starbucks-union-tactics-face-investor-pressure-for-auditof-its-conduct.

247 BNY Mellon Investment Management, Mellon Proxy Guidelines Summary, March 2023,
https://www.documentcloud.org/documents/24233660-bny-mellon-voting-policy-march-2023?responsive=1&title=1, p. 3.

228 Vanguard, Shareholder proposal requesting a third-party assessment of workers’ rights commitments at Starbucks, April 2023, https://corporate.vanguard.com/content/dam/corp/advocate/investment-stewardship/pdf/perspectives-and-commentary/voting_insights_starbucks.pdf.

249 Fidelity Investments, Proxy Voting Guidelines, February 2023, https://www.documentcloud.
org/documents/24233685-fidelity-2023?responsive=1&title=1, p. 2.

229

Majority Action analysis of data obtained from Diligent Market Intelligence.

248 Capital Group, Proxy Voting Procedures and Principles Americas Supplement, February
2023, https://www.documentcloud.org/documents/24251845-capital-group-americas-supplement-feb-2023?responsive=1&title=1, p. 2.

250 Glass Lewis, 2023 Policy Guidelines: United States, https://www.documentcloud.org/documents/24238566-us-voting-guidelines-2023-gl?responsive=1&title=1, pp. 27-28.

230 Thomas M. Mackall, LLC, Abridged Report to Starbucks Board of Directors Concerning
Starbucks’ adherence to freedom of association and collective bargaining commitments in its
Global Human Rights Statement, October 13, 2023, https://stories.starbucks.com/uploads/2023/12/
Abridged-GHRS-Report.pdf.

251

231 New York City Comptroller Brad Lander et al., Proponents’ Review of Starbucks Labor
Assessment, January 25, 2024, https://comptroller.nyc.gov/wp-content/uploads/2024/01/Proponents-Review-of-Starbucks-Assessment.pdf.

253 Goldman Sachs Asset Management, Policy, Procedures and Guidelines for Goldman Sachs
Asset Management’s Global Proxy Voting: 2023 Edition, March 2023, https://www.documentcloud.
org/documents/24233661-goldman-sachs-voting-policy-2023?responsive=1&title=1, p. 6.

232 Roni Michaely et al., “Voting Rationales,” European Corporate Governance Institute –Finance Working Paper No. 928/2023 (August 16, 2023), https://papers.ssrn.com/sol3/papers.
cfm?abstract_id=4521854.

254 Invesco, Invesco’s Policy Statement on Global Corporate Governance and Proxy Voting,effective January 2023, https://www.documentcloud.org/documents/24233672-invesco-global-voting-policy-jan-2023?responsive=1&title=1., p. 12.

233 Rob Kozlowski, “Seattle City Employees puts BlackRock on watch over ESG concerns,”
Pensions & Investments, January 20, 2017, https://www.pionline.com/article/20170120/ONLINE/170129998/seattle-city-employees-puts-blackrock-on-watch-over-esg-concerns. Seattle took
BlackRock off the watchlist in 2018 after finding that “BlackRock had made acceptable changes
to address the ESG concerns that we had identified when placing them on watch in 2016.” See
Rob Kozlowski, “Seattle City Employees takes BlackRock off watchlist,” Pensions & Investments,
January 17, 2019, https://www.pionline.com/article/20190117/ONLINE/190119867/seattle-city-employees-takes-blackrock-off-watchlist.

255 Invesco, Invesco’s Policy Statement on Global Corporate Governance and Proxy Voting,effective January 2023, p. 12.

234 For more on the motivations behind these proposals, see “Conservative Shareholder Activists
Present Proposals Addressing Civil Liberties, Debanking Conservatives, Corporate Board Incest
and Racial Equity Audits,” National Center for Public Policy Research, May 15, 2023, https://nationalcenter.org/ncppr/2023/05/15/conservative-shareholder-activists-present-proposals-addressing-civil-liberties-debanking-conservatives-corporate-board-incest-and-racial-equity-audits/(accessed January 28, 2024).
235 See “Latinos on Boards 2023,” Latino Leaders, vol. 24, no. 3 (May-June 2023), https://issuu.
com/latinoleadersmagazine/docs/may-june23, p. 136.
236 This will change in 2024. See U.S. Securities and Exchange Commission, “SEC Adopts Rules
to Enhance Proxy Voting Disclosure by Registered Investment Funds and Require Disclosure of“Say-on-Pay” Votes for Institutional Investment Managers,” https://www.sec.gov/news/press-release/2022-198.
237 ClearBridge Investments, Proxy Voting Policy, October 2023, https://www.documentcloud.
org/documents/24253044-ft-clearbridge-investments-north-america-proxy-voting-policies-procedures-sept-2023#document/p18/a2419690, p. 22.

Glass Lewis, 2023 Policy Guidelines: United States, p. 41.

252 Geode Capital, Proxy Voting Policy, February 2023, https://www.documentcloud.org/documents/24351205-geode-capital-proxy-voting-policy-feb-2023?responsive=1&title=1.

256 ISS Governance, Proxy Voting Guidelines Benchmark Policy Recommendations: UnitedStates, effective February 1, 2023, December 13, 2022, https://www.documentcloud.org/documents/24238428-iss-us-voting-guidelines?responsive=1&title=1, p. 12.
257 JPMorgan Asset Management, Global proxy voting guidelines: North America, Europe,
Middle East, Africa, Central America, South America, and Asia, April 2023, https://www.documentcloud.org/documents/24233662-jpmorgan-global-proxy-voting-guidelines-2023-redline?responsive=1&title=1, p. 25.
258 LGIM, 2023 – Global corporate governance and responsible investment principles, July 2023,
https://www.documentcloud.org/documents/24250219-legal-general-global-principles-2023, p. 11.
259 Morgan Stanley Investment Management, Equity Proxy Voting Policy and Procedures, March
1, 2023, https://www.documentcloud.org/documents/24233673-morgan-stanley-voting-policy-2023,
p.4.
260 Northern Trust, Proxy Voting Policies, Procedures, and Guidelines, effective December 15,
2022, https://www.documentcloud.org/documents/24233667-northern-trust-voting-policy-2022?responsive=1&title=1, p. 7.
261 Nuveen, Appendix A: Nuveen Proxy Voting Policy, October 2022, https://www.documentcloud.org/documents/24233668-nuveen-asset-management-voting-policy-2022-oct?responsive=1&title=1, p. A-8.

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262 State Street Global Advisors, Guidance on Diversity Disclosures and Practices, February 2023,
https://www.documentcloud.org/documents/24233685-fidelity-2023?responsive=1&title=1, p. 4.
263 T. Rowe Price, Proxy Voting Guidelines, February 2023, https://www.documentcloud.org/
documents/24233670-t-rowe-price-proxy-voting-policies-2023?responsive=1&title=1.
264 Vanguard, Vanguard advised funds: Proxy voting policy for U.S. portfolio companies, effective
February 1, 2023, https://www.documentcloud.org/documents/24233677-us_proxy_voting_2023?responsive=1&title=1, p. 7.
265

Vanguard, Vanguard advised funds: Proxy voting policy for U.S. portfolio companies, p. 7.

266 Wellington Management Company, 2023 Global Proxy Voting Guidelines, effective June
2023, https://www.documentcloud.org/documents/24233664-wellington-global-voting-guidelines-june-2023?responsive=1&title=1, p. 3
267

Wellington Management Company, 2023 Global Proxy Voting Guidelines, p.4.