The Case For a Transparent Workforce

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2017 was defined in part by intensifying focus on racial, ethnic, and gender equality in the United States. Whether it was the #MeToo movement, the Women’s March, the legacy of the confederate flag, or kneeling NFL players, questions about how we treat women and racial minorities in our communities, workplaces, schools and other public places permeated the conversations.

These events showed us that no industry is immune to the consequences of workplace inequality and underlined the need for changes in how companies measure and report diversity outcomes. The research underscores an intuitive but nevertheless vitally important fact: that to reduce sexual harassment in the workplace we must focus on hiring and promoting more women. The evidence also shows that greater workforce diversity leads to positive outcomes for talent recruitment and retention, and can even contribute to increased employee satisfaction and a happier workforce. With respect to direct financial performance, a McKinsey & Company study of more than 1,000 companies found that companies in the top quartile for gender and racial ethnicity representation are more likely to financially outperform fourth quartile companies, by margins of 33 percent and 21 percent, respectively.

Despite all the compelling reasons for companies to cultivate more women in the workforce there is limited evidence of change in high-level corporate jobs. Progress is slow. Although women make up half of the U.S. workforce, they represent just 29 percent of Vice President level roles and 21 percent of C-suite roles. Women of color, the most underrepresented group in the pipeline, account for just 3 percent of C-suite roles.

We believe it is a mistake to assume companies are building effective programs to attract and retain diverse talent if substantive data is not disclosed to support the rhetoric. Standardized data can inform company-wide strategies to build effective Diversity and Inclusion (D&I) programs by allowing effective peer comparisons.

The best standard diversity report that we know of is a company’s Employment Information Report, or EEO-1 Report. However, companies are not required to make this information public. Twenty-five percent of S&P 100 companies voluntarily do so, but more should because investors increasingly assess workplace policies and practices in their investment decision-making.

In the last two years, Trillium filed 21 shareholder proposals which asked companies to disclose their EEO-1 reports and provide descriptions of any D&I policies and practices. Four of these proposals garnered support from more than one-third of shares voted; in December 2017, our proposal at Palo Alto Networks received a majority vote of 50.9 percent. This is the first majority vote ever for a proposal of this kind and marks a significant increase in shareholder support for workforce diversity data. Since we launched this initiative, we are pleased to have reached agreements with eight companies that agreed to release workforce diversity data, allowing us to withdraw the proposals. We have pending shareholder proposals for 2018 at KeyCorp, First Republic Bank, PNC, StifelCigna, CVS and Starbucks.

This is not a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. The specific securities were selected on an objective basis and do not represent all of the securities purchased, sold or recommended for advisory clients.


Susan Baker.jpg

Susan Baker

Vice President, Shareholder Advocacy, Trillium Asset Management

Brianna Murphy.jpg

Brianna Murphy

Vice President, Shareholder Advocacy, Trillium Asset Management