Pat Miguel Tomaino
Director of Socially Responsible Investing
Download a PDF of this Impact Update
We build responsible investment portfolios for our clients. From there we address risks and create positive social impact through advocacy, specifically at several shareholder meetings this quarter. As the world turned its attention to systemic racism and police brutality against Black people, we continued to challenge racist policies and outcomes regarding companies in our portfolio and beyond. During this time, we also kept up work related to COVID-19 and the climate crisis.
Shareholder meeting update: Inclusion and CEO pay at Alphabet
Since 2017, we have pressed large technology companies to link a portion of their executive pay packages to racial and gender inclusion metrics (along with other relevant ESG goals). Alphabet (parent company of Google) has improved diversity reporting in response to pressure from investors and advocacy groups. However, there is little other progress, as we called out in a speech to Alphabet’s board this year at the company’s “virtual” shareholder meeting:
In 2020, as America faces a painful new reckoning around racism, white supremacy, and gender injustice, our Company remains predominantly white and male. According to Google’s 2020 diversity report, underrepresented people of color account for only 7.9 percent of Google’s tech workforce and only 6.8 percent of leadership.
There have been other recent missteps. This spring Google ended a prominent diversity program and shrunk teams who were working on inclusion initiatives. The mood among some Google leaders, it was reported, is that “conversations about diversity could become a liability.” How does that square with the tech giant’s recent announcement that it would spend $175 million on racial initiatives (over a vague timeframe)? We’re telling Alphabet and other technology companies that investors expect them to back up their commitments with sound human capital management and responsible business practices. Support for our shareholder proposal on inclusion and executive compensation increased notably: 36 percent of outside investors voted for it, compared to 30 percent in 2019. We will continue to press Alphabet with all the tools at our disposal, and we’ll report to you on any progress.
Other Shareholder proposal results
Our first-time proposal urging UPS to stop ignoring its large airplane carbon footprint in its climate change strategy performed very well with nearly 30 percent support from fellow investors. (Our meeting with Vanguard in April convinced the fund management giant to support our proposal). The result sends a clear signal to executives and will serve as a basis of our continued push.
Shareholder proposals are a good way to disrupt business as usual. That’s why we’re pressing the large investment manager T. Rowe Price to review its own voting on reasonable shareholder proposals regarding climate change risk. Our proposal raising this issue at T. Rowe Price received 14 percent of votes cast, a good result given that this proposal had not appeared on the company’s ballot in recent years.
We co-filed a shareholder proposal with Oxfam America urging Amazon to conduct a rigorous human rights impact assessment. This assessment could apply to everything from the controversial facial recognition software (Rekognition), which Amazon has sold to law enforcement agencies, to labor violations in the global supply chain for shrimp. The proposal won a strong 31 percent vote which will help fuel future advocacy. Shortly after the shareholder meeting, it became clear that Amazon is feeling some heat. In response to pressure from advocacy groups, investors, and, most importantly, protesters decrying police brutality, Amazon announced that it would suspend Rekognition for one year. This is a small but important first step, and the company should be guided by international human rights standards on this.
Focus On: Justice in retail
We have engaged with TJX Companies (the parent company of TJMaxx and Marshalls) on several issues over the years, including in March when we challenged the discount retailer to extend paid sick leave for workers amid the COVID-19 crisis. TJX’s solution (to close its stores during the beginning of the pandemic) seemed to us only a half measure. It lacked rigorous thinking on how enhanced sick leave could help keep people safe as stores re-opened in May.
No company is perfect, and TJX is a ready example of mixed progress. This quarter, the company finally published information on race-based pay equity after we requested this move in meetings and repeat shareholder proposals. But don’t hold your breath: TJX’s report merely states that it has analyzed its workforce and “no meaningful difference” in pay exists. We’ll keep pressing for more information on the analysis and specific data to allow comparability between retail companies.
We’ve also been inspired by recent advocacy about racism in the criminal system to ask retailers like TJX about how they collaborate with police departments in the shoplifting/”loss prevention” context. We know that racial profiling is a widespread problem in retail. Additionally, minor shoplifting offenses can be the beginning of years of grinding encounter with the biased juvenile and criminal justice systems. Call it the “fitting room-to-prison pipeline.” We urged TJX to review its relationships with law enforcement agencies, in light of the growing realization that introducing police can make many situations more disproportionate and biased. We do not want retailers to increase risks by thoughtlessly beefing up their own private security operations, which can increase the same social risks. We’ll press this complex conversation forward and report on any progress.
In other news:
We wrote to Mercadolibre, Danaher, and Costco urging those companies to develop and publish clear goals for reducing their production and use of the plastic packaging that is choking our oceans. We urged the companies to formalize their commitments by signing the New Plastics Economy Global Commitment.
We met with executives at Kroger who clarified a news story that involved the grocery chain clawing back “Hero Pay” from essential workers at the end of that bonus program. Kroger said that this was an inter-departmental error that it corrected, and we discussed how to avoid such morale-harming lapses in the future. We were gratified by many steps that the company took regarding worker and customer safety during COVID-19, including increasing paid sick time to 14 days (although so far only on a temporary basis) and several process improvements that Kroger detailed in a new white paper for other businesses operating during the pandemic. Kroger also said that the wage increases that it rolled out as part of its “Restock Kroger” plan helped improve worker retention (normally very low in the grocery business) by 32 percent between 2018 and 2019. We encouraged the company to make sick leave changes permanent, analyze and design wage increases with regard to cost of living, and also address any gender- and race-based pay gaps in its workforce.
We wrote to Expeditors International encouraging the logistics company to set a comprehensive greenhouse gas reduction target that is based on the science on the Paris Climate Accord.
Thanks for reading and sharing. For more on this work and our broader advocacy, join us on our website, Twitter, and LinkedIn. And please don’t hesitate to contact Pat Miguel Tomaino (pat@zevin.com) with your questions, thoughts, and suggestions.