New York State Comptroller Thomas P. DiNapoli and the state’s pension fund announced the filing of shareholder proposals seeking an independent audit of companies’ practices related to racial equity. The proposals were filed at Chipotle Mexican Grill, Dollar General Corp., Dollar Tree, Inc. and Match Group. The Fund has also refiled the proposal at Amazon.com, where 44% of shareholders supported it last year.
“After George Floyd’s murder, and as the American public cried out over the killings of other Black men and women, corporations pledged to fight against racial injustice. Many companies have taken steps to back their promises, but many have not,” DiNapoli said.
“Companies are responsible for their business practices and must ensure that they do not harm their bottom line. Our state’s pension fund is committed to ensuring the companies we invest in address racial equity. Research shows that ensuring equal treatment and opportunities benefits performance.”
The shareholder proposals are part of DiNapoli’s broader efforts to ensure corporate America addresses concerns about racial equity in their operations, while also holding companies accountable when they fail to act. Failure to uphold equal treatment and opportunities can put companies, and their shareholders, at risk. All five proposals call on the board of directors of each company to commission a racial equity audit analyzing the company’s impacts on civil rights, equity, diversity and inclusion, and the impacts of those issues on the company’s business. The proposals also request that the audits be publicly disclosed on the company’s website.
Amazon.com Inc. (refile)
During the 2021 proxy season, DiNapoli filed a shareholder proposal at Amazon.com Inc. requesting an independent review of the company’s policies and practices on civil rights, equity, diversity and inclusion, and how they affect the company’s business. The proposal was supported by 44.18% of the company’s shareholders, a record level of support for an environmental or social shareholder proposal at Amazon. DiNapoli has since urged Amazon’s new CEO, Andy Jassy, and the board to implement the proposal.
The Fund is now refiling the proposal as Amazon has failed to implement the proposal and continues to face repeated controversies.
Chipotle Mexican Grill
Although Chipotle has taken some measures to address racial equity, there are significant controversies facing the company that pose various regulatory and litigation risks and raise questions related to the company’s overall strategy and the company’s alignment with its public statements. According to published reports, workers of color within the company have allegedly been negatively impacted by these controversies, which include investigations into Chipotle’s scheduling, wage and hour, child labor, paid sick leave and COVID-19 practices.
Dollar General Corp. & Dollar Tree, Inc.
Dollar General and Dollar Tree are two of the largest dollar store chains in the nation. Both companies have come under public scrutiny amid concerns that dollar store chains negatively impact minority and low-income communities, including alleged high levels of violent crimes and questions regarding their role in the issue of food deserts. Both Dollar General and Dollar Tree have faced controversies related to workforce diversity and treatment of minority workers, including wage and hiring related lawsuits and published reports alleging employees have been subjected to unsafe work conditions. A racial equity audit would provide shareholders with greater insight into the impacts of both companies’ business practices on the communities where they operate and the potential risks to their bottom line.
Online dating companies like Match Group continue to face controversies regarding their use of algorithms and filtering services, but in 2020 Match announced that they would continue allowing users to filter potential partners by ethnicity, which many competitors ended due to a belief that the practice could reinforce racial bias. To date, Match has not provided information on if or how it is assessing the racial equity impacts and potential risks arising from its policies, practices and products.
Racial equity audits remain a vital tool for both shareholders and companies themselves. An independent audit conducted by a third party would review a company’s policies, practices, products, and services to analyze the way the company impacts civil rights, equity, diversity and inclusion and the impacts of those issues on the company’s business.
The goal of such audits is to end the risk of discrimination within or exhibited by the company with respect to its employees, customers, suppliers or other stakeholders.
Failure to assess the risks that corporate racial equity shortcomings pose can lead to a myriad of negative implications for companies including customer and employee attrition, negative press, significant fines and regulatory inquiries. Shareholders have a right to know if business practices threaten the bottom line.
About the New York State Common Retirement Fund
The New York State Common Retirement Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has assets of approximately $267.8 billion as of Sept. 30, 2021. The Fund has consistently been ranked as one of the best managed and best funded public plans in the nation.