Berkshire Hathaway is the latest company to resist pressure from shareholders to learn more about the racist makeup of its workforce. The upcoming clash at Berkshire’s annual general meeting on Saturday underscores mounting pressure on some of America’s largest corporations to keep their pledges to improve their diversity practices.
The conglomerate, led by famed investor Warren Buffett, has turned down a shareholder proposal asking its board of directors to publish an annual report detailing its diversity and inclusion efforts. Proposed by shareholder group As You Sow on behalf of Handlery Hotels, it claims that more diverse workplaces are more profitable, more likely to stand out from the competition, and generate higher stock returns.
“However, Berkshire Hathaway holding companies do not publish meaningful information that would enable investors to determine the effectiveness of their human capital management in relation to workplace diversity,” the group noted in the proxy statement.
As with another shareholder proposal asking the company to disclose details of its efforts to fight climate change, Berkshire is advising shareholders to vote against them at its general meeting on Saturday. The holding company argues that compiling diversity data for all of its subsidiaries would be “unreasonable”.
“The Berkshire operating companies have increased the importance and commitment to diversity, equity and inclusion through the deliberate creation of leadership positions and / or people-centric committees to support these efforts in their respective organizations and to ensure that the culture and practices of our companies be reflected on. A workplace that welcomes and appreciates everyone, “explained the Board of Directors.
The Berkshire Board’s strongest diversity and inclusion in expressing its opposition to greater transparency to date is an “indication that there may be a detachment from what is happening culturally,” said Meredith Benton, director and founder of Whistle Stop Capital, who worked on the proposal on behalf of As You Sow. “These companies that Berkshire Hathaway owns would certainly respond to headquarters saying this is an issue that is important and that they will access.”
Berkshire’s dozen of consumer and industrial brands include Geico Insurance, Burlington Northern Santa Fe Railroad, Mid-American Energy (now Berkshire Hathaway Energy), Clayton Homes, Shaw carpets, Benjamin Moore paints, Duracell batteries, Fruit of the Loom Lingerie, See’s Candies and Milk Queen. The company had sales of $ 245.5 billion and profits of $ 45.2 billion in 2020.
There’s little reason to believe that shareholders’ proposals will be adopted, given that Buffett controls about a third of the votes and has massive leverage over the company’s mom and pop investors. “What we expect is that a very strong message will be sent,” said Benton.
A similar proposal was rejected by Wells Fargo shareholders on Tuesday.
Like Berkshire, Wells Fargo turned down a proposal asking the lender to improve its racial diversity guidelines for employees and assess the company’s impact on color communities. (Berkshire remains a major shareholder in Wells Fargo despite the recent massive sales of its stake in the bank.) According to a regulatory filing, the Service Employees International Union’s retirement plan wanted the bank to conduct an internal review to “identify, prioritize, remediate and.” Avoid negative impacts on non-white stakeholders and color communities. ”The results would then be published on the company’s website.
The Wells Fargo Board of Directors has stated that a “Human Rights Impact Assessment” is in progress.
“Wells Fargo is committed to doing the job ensuring we provide our employees with an inclusive and respectful workplace where diverse talents thrive,” a lender spokesman said in an email to CBS MoneyWatch. “While we still have more work to do, we’ve taken steps that include creating different segments, representing and engaging the Inclusion Group directly to the CEO who will be responsible for the progress and execution of new and existing programs. Execution of on Diversity talent testing and sponsorship programs to promote underrepresented groups, assess senior executives for increased leadership representation, and require unconscious bias training for all managers. “
Wells Fargo intends to release 2019 and 2020 employee data on gender and race this summer, the spokesman added.
Despite these steps, some Wells Fargo employees believe their company is not doing enough to promote diversity.
“As bank employees and shareholders of Wells Fargo, we don’t want empty promises,” said Ted Laurel, a Mexican-American account closure specialist in San Antonio, Texas, at a news conference organized last week by the Committee for Better Banks (CBB), a coalition of bank employees, consumers and working groups.
The 38-year-old Army Reserves veteran and father of eight, who served in the same position for eight years, said he had unsuccessfully applied for 15 promotions. Laurel said at the press conference that other black people in his department faced similar obstacles in advancing into Wells.
“My heart was broken,” said Laurel upon learning that CEO Charles Scharf had attributed the company’s lack of black executives to the banking giant, which has “a very limited pool of black talent to recruit”.. While Scharf apologized for his words and held a conference call with employees in December to address their concerns, no specific changes had occurred, Laurel said.
“We cannot succeed if those of us who have color are not given the opportunity,” said Laurel, speaking out in favor of the diversity audit proposed by the SEIU.
Laurel applied for nine promotions and, according to Wells Fargo, did not meet the minimum requirements for the positions that typically involve about 200 applicants.
A Washington-based investment group has submitted a similar proposal to Bank of America, which Wells opposes because the company is already trying to eradicate racial inequalities. “Our actions and our focus on progress on racial justice and the regular reporting of our progress make the proposed review of the proposal unnecessary,” said the board of directors of Bank of America.
Bank of America figures show that the number of colored employees in executive positions increased from 32% in 2015 to 39% in 2020.
Not fast enough
Unlike Wells and BofA, BlackRock agrees to a breed test. CEO Larry Fink told Harvard Business Review in a recent interview that the world’s largest wealth management firm is not “moving as fast as I wanted” to increase diversity, according to Bloomberg.
A recent study by the Better Banks Committee found that black workers are the least likely to climb the corporate ladder at 13 of the country’s largest consumer banks. A February report by McKinsey & Co. found it would take nearly a century for black Americans who work in the private sector to reach parity in management. Black workers, who account for 15 million or 12% of the 125 million private sector employees and 20.6 million of the total black workforce, are found to be underrepresented in the fastest growing regions and the highest paid industries, consulting firms.
Such inequalities – along with widespread protests following the murder of George Floyd by a Minneapolis police officer last summer – sparked more promises among large corporations to strengthen their own diversity and support minority communities. Amazon, for example, promised to double the number of black directors and vice presidents and to increase the number of black employees by at least 30% this year from 2020.
But, according to labor experts, such promises often deliver far less than they promise.
“It’s a signal to consumers that they are on the right side of this issue and are doing very little in practice,” said Rebecca Konins Givan, associate professor in Rutgers University’s School of Management and Labor Relations. “You cannot credibly support racial justice but speak out against the organization of your workers,” she added when Amazon recently won against her.
When it announced its workforce diversity goals for the year, Amazon released numbers showing that black employees made up 3.8% of executive positions at the company last year.
“Good intentions don’t work”
“We know good intentions don’t work, but mechanisms, so we use the same mechanisms that we use for our key business initiatives to create a truly inclusive and equitable workplace: setting goals and regular reviews to ensure our safety. ” Progress, “wrote Beth Galetti, Amazon’s senior vice president of experience and technology, in a blog post earlier this month.
Kimberly Houser, assistant professor of business and technology law at the University of North Texas, doesn’t see a clear strategy at Amazon to address the lack of diversity.
“Not much has changed since Amazon began publishing diversity reports in 2014,” she said in an email to CBS MoneyWatch. “The accountability statements only set out vague goals. There are no consequences if they are not met.”
After Silicon Valley caught fire five years ago because of its white husband,Big tech companies like Amazon, Apple, and Google immediately began releasing data about their workplace diversity. The annual reports, originally seen as evidence of good faith efforts to recruit more women and minorities, show that these public commitments are often neglected, according to Houser.
At Apple, the share of black workers in technical professions remained unchanged at 6% from 2014 to 2020, while at Google black workers held 2.4% of technical positions last year, after 1.5% in 2014.