The JUST Report: The State of Play on Pay Equity Disclosure
The 2022 proxy season is now over and the final tally is in. According to the Sustainable Investments Institute, a record-breaking 598 ESG-related shareholder proposals were filed, up 20% from last year, and an average of 26.5% of E and S proposals actually passed, compared to last year’s 32%. Considering the extent of the backlash leveled against the ESG movement in recent months, those are respectable numbers.
Also interesting was Responsible Investor’s report that environmental proposals based on disclosure and transparency garnered more support than those that were more prescriptive. Supplying the market with more valuable and meaningful data, in other words, is more desirable than telling companies what to do.
You can apply this same principle to the issue of racial pay equity. That is, whether companies are assessing and reporting if workers are making the same pay for the same or similar roles, regardless of race or ethnicity. According to our survey research, 89% of Americans believe that conducting annual pay analyses across demographic groups is important in advancing racial equity in the workplace, and we know that companies with more advanced performance on matters relating to diversity, equity and inclusion tend to do better in the market.
As our own Ashley Marchand Orme explained on CNBC this week, and as we featured in a new report based on our Corporate Racial Equity Tracker, progress by companies remains slow but steady. Of the 100 largest American public companies by workforce size, 43% disclose that they have conducted a pay gap analysis by race and ethnicity (up from 34% last year), and 22% disclose the actual results (up from 14%). Only 22 companies – including Apple, Bank of America, Starbucks, and Verizon – report their white to non-white pay ratios.
In proxy voting, proposals calling for detailed race and gender pay gap transparency received majority support at Disney (60%) and Lowe’s (58%), and led to Chipotle, Home Depot, and Target promising to publish more pay equity data by the end of the year.
Demands from investors, workers, and consumers for more information about company positioning on things that drive value is only going to intensify. Pay equity is no different.
Be well,
Martin
This Week in Stakeholder Capitalism
Google says it will delete location data when people visit abortion clinics in order to protect their digital privacy.
H&M comes under fire in a Quartz investigation for misleading environmental scorecards.
Meta cuts its plan to hire more engineers by 30% as the company prepares for an economic downturn.
Procter & Gamble raises wages to combat worker shortages and avoid putting a third of the U.S. tampon market at risk.
What’s Happening at JUST
This week we released our latest racial pay equity disclosure analysis, part of a deep-dive into the different dimensions of our 2022 Corporate Racial Equity Tracker. What did we discover? While disclosure has increased overall, only 43% of America’s largest 100 employers disclose conducting pay equity analyses with a specific focus on race and ethnicity, and, of those, only 22% disclose the results. Our own Ashley Marchand Orme joined Leslie Pickeron on CNBC to discuss these findings and more.
Board member Peter Georgescu spoke with Ken Langone, one of the founders of Home Depot, for an in-depth look at what made the company so successful and one of the leading examples of capitalism at its best.
The Forum
(Cindy Ord – Getty Images)
“We decided everyone had to have skin in the game. We made certain that each of the four founders, including myself, would never own more than 5 percent of the company. The remaining shares would be owned by the public or the employees. We now have more than 3,000 associates who started pushing carts back into the store from the parking lot who are now millionaires. If there’s a better example of how capitalism works, you’ll have to show me.”
- Ken Langone, one of the founders of Home Depot, speaking on the company’s lasting success to Peter Georgescu in Forbes.
“Over the medium and long term, that investment will pay back to shareholders. This whole idea that profit and purpose are at odds with each other is ridiculous. I mean, if you ever have any chance of moving from being a good company to a great company, you have to have the very best employees, that love what they’re doing, that are passionate about what they’re doing. Everything else will emanate from there.”
- Dan Schulman, CEO of PayPal (and Worker Financial Wellness Partner), speaking to David Gelles on raising wages, improving benefits, and reducing healthcare costs for the company’s hourly workers to ensure the financial stability of all employees.
“Oftentimes, the people that we work with are part of a generational cycle of poverty, or an intergenerational cycle of incarceration. A job at Next Chapter helps break those cycles, but even more importantly, begin a cycle of potentially creating generational wealth. We’re already seeing apprentices from our first cohort . . . buying homes, starting families. They’re already teaching other family members how to get into software engineering as a career path.”
- Kenyatta Leal, executive director of Next Chapter, a nonprofit incubated at Slack that trains formerly incarcerated individuals for high-paying tech jobs.
Must-Reads of the Week
Morning Consult is out with its latest poll on what Americans want companies to support when it comes to abortion rights and access: a majority said they support companies covering medical services and travel and lodging for employees who need to travel to another state to access abortion care (51%). Prohibiting discussion of the issue at work, as Meta has done, was unpopular, with 57% of respondents opposed to the policy. Experts weigh in on what leaders should do instead in Insider.
The Journal explores how two of the country’s largest employers, Walmart and Target, differ in approaches to abortion coverage while others scramble to figure out not only a response, but what their health benefits actually cover.
As discussions heat up on if we’re currently in or heading toward a recession, The Wall Street Journal discusses that if we are in a recession, it’s a “very strange one,” since economic output is down but the job market remains strong. Insider says “What recession?” amidst reports that 4.3 million Americans quit their jobs in May. All eyes will be on the latest job numbers today.
The Journal also looks at the trend of more companies offering mid-year raises as a way to retain employees amidst a competitive white-collar job market. Meanwhile, households at almost all income levels tap into their pandemic savings as inflation and gas costs eat into their pockets.
Chart of the Week
This chart comes from our latest analysis of racial pay equity. Across the 85 companies that we tracked in both 2021 and 2022, great progress has been made over the last year when it comes to disclosure, but still a minority of companies disclose conducting a race and ethnicity pay gap analysis, and even fewer disclose the results. Explore the insights here.
Get to Know JUST
Amy Liu
Interim President, The Brookings Institution
JUST Capital Board Member
Amy Liu is the Interim President of the Brookings Institution. She previously served as Vice President and Director of Brookings Metro and the Adeline M. and Alfred I. Johnson Chair in Urban and Metropolitan Policy. Amy also sits on the boards of several nonprofits, including Equal Measure, Connected DMV, and ACT for Alexandria.
This week, Brookings appointed Amy as its Interim President, focusing on ensuring organizational continuity and stability. She has been with Brookings for more than 25 years and co-founded Brookings Metro in 1996. Her expertise in cities and metropolitan areas has helped solidify Brooking Metro as a leading source for organizations and individuals focused on creating thriving and just communities. “There is so much at stake in the U.S. and across the globe. We stand ready to do our part,” Amy said of her appointment and Brookings’ impact.
