Racial equity proposals gain momentum on both sides of the border

Since 2021, investor action has gained momentum, pushing issuers on their performance on racial justice.

Investors have focused on a demand for companies to undertake “racial equity audits.”  A lengthy list of companies has agreed, either voluntarily, or as a result of shareholder votes, to allowing an expert, independent party with civil rights expertise review their racial equity risks, and report publicly on the findings. Starbucks, AirBnB, and Meta Platforms have each undertaken these audits, while additional companies including JP Morgan Chase, Tyson Foods, Amazon, State Street, and Blackrock, have committed to doing so.

In 2022, SHARE has supported this momentum through engagements with Mondelez International, Constellation Software, and Intact Financial.

Mondelez investors hungry for action from snack-foods giant

From its advertising, to its political donations, to its plastics pollution, Mondelēz International continues to have an adverse impact on racialized populations. Mondelez is a leading manufacturer of snacks and confections, including Cadburys, Oreo, and Toblerone.

At the company’s May 18 AGM, 47% of Mondelez shareholders voted in favour of a proposal, filed by SHARE, on behalf of Dragonfly Ventures, calling on the company to undertake a racial equity audit.

In 2020, Mondelēz announced a multi-year commitment to advance diversity, equity, and inclusion through its U.S. and global operations. But these commitments do not address the company’s impacts on those beyond internal stakeholders.

“Since 2021, an increasing number of investors have been holding companies accountable to their own public racial equity commitments and goals,” said Anthony Schein, Director of Shareholder Advocacy at SHARE. “A third-party audit will show if Mondelēz’s actions are truly contributing to its stated racial equity commitments.”

Shareholders are particularly concerned with the global environmental impact Mondelēz is having – particularly on Black, Indigenous, and racialized communities. The company was sued in 2020 for its contribution to the global plastics pollution crisis in California, and a 2021 audit found that Mondelēz was one of the largest plastics polluters in the world.

In addition, Mondelēz’s political donations do not seem to align with its public commitment to racial equity and DEI.

While the company made donations to NAACP and to the Black Lives Matter Global Network in 2020, its political donations run counter to these philanthropic pledges. In 2020, the company donated to the campaign of former Senator Kelly Loeffler, who has gone on record as saying she believes Black Lives Matter promotes “violence and destruction across the country.”

“Attacks on racial equity fuel anti-Blackness and hinder progress towards racial justice,” said Schein. “Donations to candidates who make such remarks undercut the company’s credibility on racial justice issues. The proposed audit will help the company, and investors, assess the alignment of its political donations with its racial equity strategy.”

Stars align for majority vote on Constellation Software proposal

SHARE filed racial equity proposals at two Canadian companies: Intact Financial, and Constellation Software. Earlier in 2022, SHARE agreed to withdraw its proposal at Intact (filed on behalf of the United Church of Canada Pension), based on commitments from the company to review certain policies and practices in the coming year.

At the company’s AGM on May 5, almost two-thirds (63%) of shareholders voted in favour of SHARE’s proposal (also filed on behalf of the United Church of Canada Pension).

According to Schein, “this is a crucial step for the company, which has previously taken very limited steps to address DEI risks, and a signal to Canadian issuers about the expectations of institutional investors.” Schein continued that, going into 2023, there is momentum on both sides of the border. “We only expect to see increased pressure on companies to undertake—and act on—audits in the coming year.”

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