Have We Reached an Inflection Point for Racial Equity Audits?

Before 2020, calls for racial equity audits were few and far between. The earliest companies to perform them, most notably FacebookAirbnb, and Starbucks, did so after facing immense pressure to address discriminatory practices in their businesses. For instance, in Starbucks’ case, the audit was spurred on by the unwarranted arrest of two Black men in a Philadelphia store; and in Airbnb’s case, from Black renters’ claims of pervasive discrimination.
As social justice protests spread across the country over the past two years, many companies, including Johnson & Johnson, Citi, Goldman Sachs, and Wells Fargo opposed shareholder calls for racial equity audits. The common thread in these rejections was the belief that they were already fulfilling their corporate responsibility to close the racial wealth gap, and no further action was required. Some wall street banks also took it a step further – they asked the SEC to block racial equity audit proposals from coming to a vote. 
But shareholder proposals for corporate racial equity audits have increased since President Joe Biden’s January signing of an executive order to advance equality, and we’re seeing an increasing number of companies answer the call. 

  • Our data shows 41 racial equity audit proposals during the last two proxy seasons, with eight of them passing at McDonald’s, Home Depot, Altria, Waste Management, Maximus, Johnson & Johnson, Stericycle, and Apple. 
  • That said, support, or lack of support for a proposal doesn’t always mean an audit is coming. For instance, only 38% of Citi shareholders voted in favor of an audit in April 2021, but Citi committed to one anyway in October 2021. 
  • Of the 41 total proposals, the company with the highest level of shareholder support was the government services company Maximus (64.5% of eligible shares in favor), and on the low end was Wells Fargo (12.89% of eligible shares in favor). Directly below are the results from all proposals:  

Finally, in total we’re tracking 12 S&P 500 companies that have already conducted, or have agreed to conduct a racial equity audit – Amazon, JPMorgan Chase, Citigroup, Verizon, BlackRock, Dow, McDonald’s, Tyson, State Street, Apple, Starbucks, and Meta (Facebook).

Twelve out of 500 is certainly not a large number. But if you compare shareholder support for a racial equity audit (and more importantly a company’s willingness to conduct one), versus the same time last year, one could argue that we may have reached an inflection point on this issue.

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