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This time last year, companies were making grand promises about diversity and inclusion in their workplaces. Amid a rising tide of support for Black Lives Matter protestors, many announced initiatives to recruit and retain more employees of color, donated millions to racial justice organizations and pledged to diversify their leadership teams.
Now, increasingly, their stakeholders want to know if they are delivering on these commitments.
According to a report from proxy advisor Alliance Advisors, shareholder proposals related to diversity and equality increased fourfold between 2020 and 2021. In most cases, these proposals have centered on transparency, calling on companies to publish their workforce data and disclose recruitment, promotion and retention rates of diverse employees.
As You Sow, a shareholder advocacy group, has pressed companies including Nike, TJX Companies, and American Express to share quantitative data on their diversity, equity and inclusion (DEI) efforts, and won majority support at several recent investor meetings. The organization argues that only with clear, comparable metrics can the effectiveness of these programs be measured.
Plus, in terms of basic demographics, at least, businesses already have this data available: The U.S. Equal Employment Opportunity Commission requires companies with more than 100 employees to report annually on the race, ethnicity and gender of employees across a range of job categories. EEO-1 forms, as they’re known, are confidential, but about 46% of the S&P 500’s 100 largest companies by market cap voluntarily release them, according to As You Sow.
Last July, New York City Comptroller Scott Stringer launched a campaign on behalf of several city pension funds asking some of the country’s biggest corporations — among them Walmart, Target, Amazon, and Nike — to publicly disclose their EEO-1 data.
“We’re asking companies that issued statements in support of racial justice to walk the walk and publicly disclose the demographics of their employees by race, gender, and ethnicity – including in their leadership and senior management,” said Comptroller Stringer in a statement. “This information is crucial for shareowners to better understand diversity and workforce practices and identify areas for growth.”
Without this kind of transparency, a company risks the perception that it is using diversity as a marketing ploy, said Meredith Benton, principal of the consultancy Whistle Stop Capital and workplace equity program manager for As You Sow.
“This is one of the few places where I can say there’s actually a really simple answer: open and transparent conversation with real data. You open your house up, you pull open the curtains, you open the doors, you say, ‘come on in,’” she said. “I don’t think anyone is expecting perfection. It’s impossible. It’s too complex. It’s too intertwined with broader societal challenges.”
Still, some companies remain closed off or have so far shared only partial information. The retail community, in particular, has been reluctant to disclose data, said Benton, adding that the discrepancies between the low-wage workforce and the white-collar executives often paint a less-than-flattering picture.
“Their numbers tend to look terrible. They tend to have a lot of diversity on the front lines and very limited diversity in their executive suite. And so that contrast tends to be really stark,” she said.
At Amazon last year, for example, Black and Latinx employees comprised 31% and 26.4%, respectively, of the company’s U.S. field and customer support team, which includes warehouse workers. At the senior leadership level, however, those shares fell to 3.8% and 3.9%, with white employees accounting for 70.7% of roles.
Nike, for its part, published five years of diversity data in its 2020 Impact Report, showing a 5.16 percentage point increase in the share of racial and ethnic minorities in its overall workforce during that period and a 13.38 percentage point increase at the VP level. On the basis of that disclosure, Nike has asked regulators to block As You Sow’s proposal ahead of its September investor meeting.
In a statement to FN, a Nike spokesperson said: “We do plan to publish our 2021 EEO-1 data after it is submitted. However, we do not manage our D&I strategy or measure our progress through the lens of the EEO-1 data. We believe the data we already provide in our FY20 Impact Report are more reflective of our diversity as a company that operates on a global scale and are a more accurate reflection of our progress towards diversity and inclusion.”
As You Sow argues that Nike’s current reporting falls short because its formatting does not allow the data to be compared with that of other companies, and because Nike declined to share promotion and retention rates for its employees by race and ethnicity.
Elsewhere in the industry, disclosure is spotty: Tapestry and VF Corp. report partial data. Under Armour, like Nike, shares the race and ethnicity breakdown of employees by job level, but doesn’t offer promotion or retention rates, while Gap has promised more data and a dedicated Equality & Belonging report in 2021. This week, Ralph Lauren released a 64-page Global Citizenship & Sustainability report for 2021 outlining its EEO-1 data and diversity goals, including having at least 20% of its global leadership team be from underrepresented racial and ethnic groups by 2023.
Adidas, which last year faced significant criticism from Black employees, said in September that it is “hitting above” the diversity and inclusion targets it outlined last June, which include 20% to 23% representation of Black and LatinX employees in U.S. corporate roles, and 12% in leadership positions by 2025.
As brands continue to join the conversation around social justice, Benton said she will be watching to see how their actions measure up to their words.
“Investors should be very wary of a company that’s building its brand on justice issues who can’t show that its own house is in order, or at least in the process of being organized,” she said.
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