Racial equity proposals get solid shareholder support

By James Langton | February 23, 2024 | Last updated on February 23, 2024
2 min read
Diverse business people in a meeting
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Shareholder proposals calling for action on racial equity issues garnered support in last year’s proxy season, while anti-ESG proposals failed to gain traction, according to Vancouver’s Shareholder Association for Research and Education (SHARE).

The firm tracked 41 shareholder proposals related to racial equity issues in Canada and the U.S., including 15 that called on companies to carry out independent racial equity audits. The audit proposals received an average of 23% shareholder support.

In Canada, only two of these proposals went to a vote, at Royal Bank of Canada (RBC) and the Bank of Montreal (BMO) — where they received 42% and 38% support from shareholders, respectively. In the wake of those votes, both banks committed to carry out audits.

Two other proposals on the issue were withdrawn after engagement with the firms: National Bank of Canada and CIBC.

There were also 26 proposals aimed at enhancing workplace diversity, equity and inclusion (DEI), the report noted. Ten of these called on companies to disclose racial and gender pay metrics.

“These proposals tend to perform better than proposals asking for a broader DEI report as they received 33.8% shareholder support on average,” SHARE said, noting that one achieved majority (52%) support.

Proposals that asked companies to report on DEI efforts overall received 25.3% support on average, including one company where the issue received majority support.

But anti-ESG proposals garnered very little shareholder support, SHARE said: “Some shareholder proposals labelled as racial equity proposals were actually resolutions filed by organizations in the United States to block initiatives on racial equity.”

In some cases these proposals were designed to prevent filings by other shareholders, and in others they called for the company to discontinue equity efforts.

On average, these proposals received less than 1.6% support from shareholders, according to the report: “These proposals received exceptionally low votes as investors were, for the most part, able to distinguish them from other efforts.”

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.