Why Are Companies Still So Against Data Transparency?

In 1998, Home Depot investors asked the home improvement retailer to put out EEO-1 figures for the first time. With the home improvement retailer paying $104 million the previous fall to settle a lawsuit against allegations of gender discrimination, shareholders said they were entitled to information that helps them assess financial risk; they asked for EEO-1 data, as well as a summary on the company’s policies and initiatives to advance equal opportunity for women and people of color.

Not surprisingly, Home Depot asked shareholders to vote against the proposal. Similar proposals were put forth a whopping 18 times, with the company asking shareholders to vote them down every time. This year, the company finally relented and committed to disclosing their EEO-1 information going forward.

By law, every private US company with at least 100 employees is required to report the demographic makeup of its workforce to the government, but they are not required to disclose any of it publicly. According to estimates, only 40% of Russell 1000 companies share “some” diversity data, and even then, it’s hard to benchmark success or progress against that data because companies can pick and choose what to report, how to report, and where they present that information.

What were the reasons that Home Depot gave for not disclosing its data? Well, they gave every excuse under the sun: Between 2005 and 2008, it said that public dissemination of the information could be “manipulated or misinterpreted by those with interests adverse to the Company“; a decade later in 2014, the excuse was that its stakeholders “have rejected the proposal at twelve previous annual meetings”; two years later, it rejected the proposal because the proposal was “rejected at thirteen previous annual meetings”; in 2017, the company said that the request report would divert company resources “without providing real value to [Home Depot] or its shareholders.

While Home Depot is a more egregious example, companies like Charter CommunicationsDuPont, and Union Pacific have similar shareholder proposals pending and all the companies have asked for “no” votes. Walmart took it a step further and asked the SEC to prevent shareholders from even voting on the matter.

Every public company should be disclosing their diversity data — and especially if they’ve loudly declared that they’re making investments towards diversity and inclusion. The report is the most consistent, standardized, granular representation of data that gives stakeholders information to compare companies on an apples-to-apples basis. It’s a way to cut through PR noise, where companies boast of diversity efforts, make lofty goals, but then fail to disclose any information that contextualizes the company’s workforce or provide any data to benchmark progress. Boeing, for example, said in 2019 it’s making “strides in diversity and inclusion,” but good luck finding any specifics that support these proclamations on its website or in company filings.

Last summer, New York City Comptroller Scott Stringer, sent letters to 67 S&P 100 companies asking them to take concrete action to affirm their diversity commitments by publicly disclosing their annual EEO-1 report data. “Full disclosure of the EEO‐1 Report [will] provide investors with critical information that disclosure of diversity metrics selectively collected by management or partial EEO‐1 disclosure will not,” his office wrote in its letter to Amazon. In response to the campaign, by December, 40 additional companies committed to disclosing their data, beginning this year. Unrelated, investors at the world’s three largest asset managers have updated their proxyguidelines to request companies report their diversity data, threatening to vote against board members or support shareholder proposals of companies that do not.

The demands from large asset managers has accomplished what activist investors and public pressure could not. As of a year ago, only 14 companies in the S&P 100 regularly made their EEO-1 data public to stakeholders. DiversIQ estimates that 78 companies have now either disclosed that information or committed to disclose that information moving forward.

S&P 100 EEO-1 Disclsoures

Blowback from diversity data disclosure is to be expected—for many companies, the figures will be downright embarrassing. But sharing that information with the public is the only way for companies to be held accountable and drive progress towards real change.

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