2022 Proxy Season Review: Increased Shareholder Focus on Racial Justice

2022 Proxy Season Review: Increased Shareholder Focus on Racial Justice

Blog ESG Epicenter

The 2022 proxy season has highlighted shareholders’ ever-growing focus on diversity, equity, and inclusion (DEI).  In 2021, a new trend emerged as 13 shareholder proposals were filed calling on companies to conduct “civil rights” or “racial equity” audits.  This year’s proxy season saw a dramatic increase in the number of these proposals, with 40 companies receiving such requests. 

Whereas the proposals filed in 2021 largely focused on the financial services industry, companies across a range of industries—including tech, retail, consumer products, and insurance—received proposals in 2022.  The proposals vary in their specifics, but generally request that a company retain a third party to conduct an audit assessing the racial impacts of the company’s business on internal and external stakeholders.  Proposals tend to highlight a few internal and external areas of focus for an audit—for example, employee diversity, DEI initiatives, or the external impact of a company’s products, services, or investments.

Unlike in 2021, when none of the proposals that ultimately were voted upon received majority shareholder support, eight proposals requesting equity audits received majority shareholder support this year.1  Sixteen such proposals were withdrawn by the petitioning shareholders prior to a vote—and in some of these cases, companies have already announced their intention to conduct an equity audit.  

This season also saw a proliferation of “anti ESG” shareholder proposals, with the National Center for Public Policy Research (NCPPR) filing ten “civil rights and non-discrimination” proposals.  While the resolution text of these proposals calls on companies to conduct audits of their impact on civil rights, the proposals also argue that “anti-racist” programs are discriminatory “against employees deemed non-diverse.”  NCPPR’s proposals were uniformly unsuccessful this season, achieving less than 5% of shareholder support in each instance. 

Given the likelihood of continued support for equity audit proposals, and the increasing pressure from shareholders and consumers on DEI issues more generally, companies should consider their options for proactive engagement on these issues.  Companies may contemplate conducting a voluntary equity audit—even when they have not yet received a shareholder proposal or when a proposal has failed—to preempt future proposals and to retain the flexibility to control the scope and timing of an audit.  And all companies, as this proxy season draws to a close, should pay close attention to sentiments among shareholders and ready themselves for external engagement on DEI issues.

The WilmerHale team monitors trends in this area and regularly advises companies on navigating developments.  Please contact the WilmerHale ESG team to learn more. 

1 As of the date of this post, equity audit proposals have passed at MAXIMUS, Inc., McDonald’s Corporation, Home Depot, Inc., Waste Management, Inc., Stericycle, Inc., Johnson & Johnson, Apple, Inc., and Altria Group, Inc.  Proposals are still pending at three additional companies.


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