Some of the concerns raised by SOC, the Service Employees International Union and Trillium Asset Management included allegations that Apple shut down an employee-run survey about pay, as well as a lack of diversity in the companys leadership. +0.05% ', He suggested that audits should be professionalized and standardized, and added that they are just one part of a larger process. Conservative shareholder-activists have increasingly fought back against left-wing politics in Americas boardrooms. Citi is the only large U.S. bank among the first 50 companies to participate. Not only do such audits inform shareholders about their investments, but they can help companies measure performance in terms of achieving civil rights, social justice, or other diversity, equity, and inclusion (DEI)-related goals. -0.62% recently committed to a racial-equity audit, avoiding a shareholder vote on a proposal for one. Amazon.com Inc. Six months later, Citi has made an about-face and agreed to conduct a racial equity audit. The measure is nonbinding, so it remains to be seen whether the company will adopt the recommendation. Robinson said Airbnb, whose civil-rights audit was completed in 2016, took it seriously and put in the energy to make changes, including measuring discrimination on its platform. Covington & Burlingconducted a similar civil rights assessment of Starbucks, and published a report in 2019. Some recommendations may exceed current industry practice. Citi was one of the first institutions to sign the Office of the Comptroller of the Currencys Project REACh Pledge to promote the vitality of Minority Depository Institutions and homeownership. A Citibank spokesperson said in an email that the company does not see merit-based hiring and diversity programming as being in conflict with each other.. Management will have to grapple with the operational implications of the work and auditors recommendations which could include, for example, conducting a comprehensive culture survey on a periodic basis, rolling out conscious inclusion training across all employee levels; modifying complaint or issue resolution processes, conducting pay equity analyses, etc. /marketintelligence/en/news-insights/latest-news-headlines/citigroup-reverses-course-agrees-to-conduct-racial-equity-audit-67234101 In some cases, examples of harms from the real world are brought to light through lawsuits. +0.35% Then, if a request or demand to conduct a racial equity audit is later lodged by a shareholder group or other external stakeholder, the results of which likely will be made public, the company has visibility as to key issues and data gaps, as well as a promising head start on the path to a successful outcome. And Amazon on April 14 said in a proxy statement that it would undergo an independent racial equity audit. According to Citi, ARE is designed to provide greater access to banking and credit in communities of color, increase investment in black-owned businesses, expand affordable housing and homeownership among black Americans and advance anti-racist practices within the company and the financial services industry. Financial institutions such as BlackRock and Morgan Stanley have likewise agreed to racial audits, while others such as Goldman Sachs have resisted calls for such investigations. Measurement and transparency are important components of the work we are doing to advance [DE&I], both at our bank and through our contributions to our communities and society more generally. However, Covington & Burlingconducted a similar civil rights assessment of Starbucks, and, Conducting an audit of our ARE initiative will help us assess the impact our work is having and will help inform how to adapt and grow our work to address the racial wealth gap, Edward Skyler, Citi's head of global public affairs, said in the post. If major players like Microsoft and Amazon are doing this, that could force other companies to also do the same, he said. But we do need to see them move forward with same type of speed, time and resources that they give [to other things they prioritize].. As racial equity audit requests increase, companies will be required to critically examine the impacts of their current activities, policies, and practices on communities of color. At the time, CtW also mentioned a fine issued by the Treasury Department in 2019 over allegedly discriminatory practices in mortgage discounts and credits, as well as the presence of just one Black executive in Citis C-suite. Conservative shareholder-activists bought stock in the two banks to present the proposals, which suggest the companies diversity training and minority hiring quotas foster reverse discrimination against Whites. Announced Citi Global Wealth Investments steps to help embed racial equity in asset management, including a goal to onboard 5-15 diverse owned or managed fund managers to Citis platform $200 million in client capital is expected to be invested in these funds by the end of 2023. +1.51%, The Uvalde disaster and our right to self-defense, Why the Jan. 6 committee is doomed to fail. here for reprint permission. We look forward to partnering with Citi to address these concerns to pave the way for a financial industry that understands entrenched racial inequity, changes the way it conducts business, and invests in the communities it serves to close the racial wealth gap.. This data will allow Citi to identify opportunities to increase representation of diverse attorneys on Citi matters. the most valuable publicly traded U.S. company, approved a proposal this spring. As published reports make clear, these audits are time and labor-intensive endeavors. Citi launched its $1 billion Action for Racial Equity (ARE) initiativein September 2020 to combat the racial wealth gap and exclusionary financial practices in the U.S. Today, were demonstrating our ongoing support for measurement and transparency by committing to conduct a racial equity audit.. When public companies take sides in political debates, it is to the detriment of company shareholders, said Ed Rensi, a former CEO of McDonalds USA who is heading a boardroom initiative to expand the number of proposals. Bank of America and Citigroup shareholders rejected proposed audits of the companies anti-racism policies Tuesday during their annual meetings. +0.62%

We believe that the finance industry has played a critical role in perpetuating unequal wealth distribution to communities of color.

By Valecia M. McDowell and Elena F. Mitchell. A checkup doesnt mean youre going to be healthier. Updated the Citi Environmental and Social Risk Management Policy for project-related financing to strengthen due diligence processes for environmental justice and social impacts on communities of color. At Coca-Colas shareholders meeting on Tuesday, the Free Enterprise Project asked the company to end its sponsorship of the Human Rights Campaign over the LGBT advocacy groups opposition to Floridas Parental Rights in Education law. Announced participation in MLT's Black Equity at Work Certification, a first-of-its-kind, standard and roadmap for employers that want to achieve Black equity, internally, and support Black equity in society. Click SBUX, Announced a third-party racial equity audit of the. By agreeing to a third-party racial equity audit, Citi is taking a critical step toward confronting centuries-old harms against marginalized communities that are still present to this day, Dieter Waizenegger, executive director of SOC, said in a statement. "By agreeing to a third-party racial equity audit, Citi is taking a critical step toward confronting centuries-old harms against marginalized communities that are still present to this day," Dieter Waizenegger, executive director of SOC Investment Group, said in the post. You need the real world telling you.. The retail and internet company said its audit will be led by Loretta Lynch, who under former President Barack Obama became the first African-American woman to serve as U.S. attorney general, and the law firm where she now works. Citi management had said in the proxy statement that the company has made a commitment to social justice and racial equity in its operations, business dealings and engagement with stakeholders, customers and employees, Given Citis commitment to addressing racial disparities in banking, matters of social justice and the racial wealth gap, and the resulting reports and disclosures Citi publishes in furtherance of its commitment, Citi believes it is already addressing the intent of this proposal to help Citi identify, prioritize, remedy and avoid adverse impacts on non-white stakeholders and communities of color, thereby rendering the proposal unnecessary.. Faith & Freedoms Timothy Head joins Cheryl Chumley, - Meanwhile, the SEC is staffing up its cyber unit to fight a potential uptick in crypto fraud. The ride-hailing and delivery company announced in May that it had committed to an audit. Copyright IR Media Group Ltd. 1995 - 2022 All rights reserved. Increasingly, they also are requesting, if not demanding, that companies consider civil rights and social justice issues, often through racial equity audits. -0.66% Terms of Use / Privacy Policy / Manage Newsletters, Get Thursdays top stories with George Gerbo in five minutes or less. Moore & Van Allen PLLC attorneys Valecia M. McDowell and Elena F. Mitchell recently conducted a racial equity audit for a publicly traded company and offer insights on how companies should approach conducting such an audit. to agree to an external audit to see how its work impacts non-white stakeholders and communities of color. Significantly, studies have found that that promoting such goals can increase profit and competitive advantage.

Citi signed on to the Corporate Call to Action: Coalition for Equity & Opportunity (CEO), launched by the Connecticut State Treasurer and the Ford Foundation. AMZN, The company has since been in listening mode regarding an audit, according to a group that has met with Apple representatives. Besides the biggest of the tech behemoths, Citigroup Inc. +0.34% A significant number of shareholders, but not a majority (38%), voted in favor of conducting the audit. The stockholder proposal at Alphabet includes the concern that Google and YouTube have been implicated in perpetuating racism.When reached for comment, a spokeswoman for Alphabet referred to statements the company made in its proxy, which tout its commitment to racial equity. ", Get the free daily newsletter read by industry experts. Its here are the issues and challenges that management needs to address. Wells lost $576 million over equity securities but is also bolstering its reserves by that much. While companies dismissing equity concerns may find themselves targeted by investors and proxy advisory firms, external advocacy groups, or even federal or state governmental entities, those taking a proactive approach or otherwise agreeing to conduct such audits may help progress civil rights, social justice, and DEI issues and see improved financial performance, increased shareholder value, and positive reputational impacts. | 2:00PM ET, $1 billion Action for Racial Equity (ARE) initiative, Wells Fargo, State Street gambles highlight earnings' good, bad, uneasy, Truist eyes M&A growth amid rising expenses, Goldman CEO pitches SBA reform plan as recession threatens small business, Wells Fargo launches new round of home-lending layoffs, Goldman slows hiring, plans to reinstate potential job-cut tool, Digital Customer Service Is A Clear Differentiator for Banks, Benchmark Report: Digital Transformation in Banking, Four Digital Banking Myths That Data Disproves, My Worldview Has Been Destroyed: Chinese Banking Scandal Tests Faith in the System, Former Coinbase manager and two others charged in crypto insider trading scheme, Deutsche Bank Settles Money-Laundering Case for $7.1 Million, Building the Future Bank: Hyperautomation and the New World of Banking, Emerging Communication Solutions for Remote Customer Engagement, Top 3 Ways AI is Enabling Leading Financial Institutions to Capture Market Growth Opportunity - Faster, How AI-Driven Accountholder Insights Fuel Record Acquisition, Expansion, and Retention, Jefferies restructures to refocus on investment-banking core, House-passed NDAA includes banking provisions for cannabis, JPMorgan's Dimon blasts 'capricious, arbitrary' Fed stress tests. SOC Investment Group (then known as CtW Investment Group) filed a proposal seeking a racial equity audit in Citis proxy statement this year. Skyler says the law firm has civil rights expertise and experience leading racial equity audits in different industries. In May, Robinson presented a shareholder resolution at McDonalds annual general meeting, saying numerous lawsuits show that the company has reinforced a system of inequity and discrimination against Black people and women within its corporate ranks and throughout its franchise network. About 55% of McDonalds shareholders approved the shareholder proposal for a civil-rights audit, whose lead filer was SOC. Citi also is the only large U.S. bank among the first 50 companies to participate. Active discrimination on the basis of race, sex and orientation is illegal and wrong, whoever its aimed at, Scott Shepard, director of the centers Free Enterprise Project, said Tuesday in a statement. We need standards to make sure the auditors are dealing with conflicts of interest.. As such, from the outset, companies should consider the purpose and determine the scope of the audit. At Apple, the shareholder resolution for a civil-rights audit received 53% of shareholder votes cast in March. Obtained detailed diversity data from the majority of Citis U.S. law firm partners who make up more than two-thirds of our U.S. Legal spend. Citi then asked shareholders to reject the resolution calling for such an audit. We look forward to partnering with Citi to address these concerns to pave the way for a financial industry that understands entrenched racial inequity, changes the way it conducts business and invests in the communities it serves to close the racial wealth gap., Move comes amid growing pressure on companies to address DE&I matters, Sign up to get stories direct to your inbox. It received the backing of 38.6 percent of votes cast during the companys AGM in April. Citi believes that the stockholder Proposal is not necessary in light of Citis ongoing work, policies, and training supporting equal employment opportunities for all employees, the board said in its recommendation. Cokes board did not respond to the Free Enterprise Projects request during the meeting. Citigroup Inc. has committed to conduct a racial equity audit to evaluate its efforts in helping to address the racial wealth gap in the U.S., according to a blog post on the bank's website. RayJays Strong Retention, Record Recruiting Helps Income Soar 78% YoY, Ex-FA with Dozens of Customer Disputes on Record Indicted on 10 Counts of Fraud, Robinhood Sets Stage to Lure More Users, Incentivize Those with Inactive Accounts, Ameriprise CEO Says Hiring the Right Advisors is Lifting Productivity, Stifel Throws Weight Behind Previously Ignored Independent Channel, Fidelity Plans to Add Nearly 1,000 New Jobs in Florida, House Dems Roll Out Bill to Boost Social Security with Higher Taxes, Citi Submits to Third-Party Racial Equity Audit. Denis Charlet/Agence France-Presse/Getty Images, Two years after George Floyds killing, Big Tech shareholders vote on racial-justice proposals, Companies declared Black lives matter last year, and now theyre being asked to prove it, Im a Silicon Valley M&A pro, and my advice to Elon Musk is to stop his courtroom gameplaying over Twitter, Nancy Pelosis husband buys millions worth of Nvidia stock ahead of chip-manufacturing bill vote, Pelosi says her husband has absolutely not made any stock trades based on information from her, Does Sex Always Sell? conduct a racial equity audit to evaluate its efforts in helping to address the racial wealth gap in the U.S., according to a blog post on the bank's website. In the wake of the police killings of George Floyd and Breonna Taylor, several Wall Street banks such as Bank of America and U.S. Bank collectively pledged billions to help fight racial inequality. And Walt Disney Co. shareholders rejected an earlier antiracism audit proposal from the project at their annual meeting last month. This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners. The audit will be conducted by attorneys at Covington & Burling LLP and will include input from a range of stakeholders, including colleagues involved in implementing the bank's $1 billion-plus Action for Racial Equity initiative and civil rights organizations. esgSubNav, Discover more about S&P Globals offerings. Develop standards for inclusive software design that eliminate bias and help deliver equitable outcomes to the communities Citi serves. The vote failed because under Alphabets dual-class structure, insiders such as Google co-founders Larry Page and Sergey Brin hold the bulk of Class B shares, which are worth 10 votes each. Market Intelligence Get started

We believe that the only way to effectively address racial injustice and economic inequality is careful study of how the industrys products and services have contributed to this imbalance. -0.24%, Began working with advertising agency partners that comprise the largest portion of Citis marketing spend to increase diverse representation of agency teams, including senior leadership, and to help ensure diversity in Citi marketing materials. Ahead of the 2021 stockholders meeting, Citi urged shareholders to reject the racial equity audit. Valecia M. McDowell is the co-chair of the White Collar, Regulatory Defense & Investigations practice at Moore & Van Allen in Charlotte, N.C. Elena F. Mitchell is a senior associate at Moore & Van Allen. You need the markets to be doing the audits; it cant be just a single expert, he said. Proposal 5 in Bank of Americas 2022 proxy statement asked its board of directors to commission a racial equity audit analyzing the Companys impacts on civil rights and non-discrimination, and the impacts of those issues on the Companys business. The board recommended that shareholders vote against the proposal. Meanwhile, Facebook parent company Meta Platforms Inc. +1.48% We have shown our commitment to these principles when we set and disclosed our representation goals and shared the results of our pay equity analysis. Want to share a company announcement with your peers? She also said the company has made substantial progress and that 91% of the audits recommendations have either been completed or are in progress. So the resolution received only 22.4% of overall votes. UBER, Learn more about a Bloomberg Law subscription, Log in to access all of your BLAW products. Proposal 9 in Citigroups proxy statement requested an audit from an independent and unbiased third party with input from civil-rights organizations, employees, communities in which the Company operates and other stakeholders, of all viewpoints and perspectives.. The move comes in a year when several US financial institutions have faced requests for racial equity audits amid growing investor scrutiny of diversity, equity and inclusion (DE&I) issues at US companies. Both were part of the team that conducted CoreCivics racial equity audit. The OCC said the bank failed to provide mortgage discounts to some eligible borrowers, which adversely affected people of color. We encourage companies to seriously consider performing comprehensive, privileged, or confidential internal assessments sooner rather than later to identify areas of opportunity and ensure processes are functioning as designed. Apple has not commented publicly about the passage of the proposal, and the company did not return MarketWatchs request for comment. In light of the protests sparked by the murder of George Floyd in June 2020, the CtW Investment Group has requested systemically important financial institutions to conduct a racial equity audit that identifies, prioritizes, and remedies the adverse impacts of the banks policies and practices on non-white stakeholders and communities of color. GOOG, The SEC has voted to undo Trump-era rules that handed companies more involvement in the creation of proxy advice. Subscribe to Banking Dive for top news, trends & analysis. We have shown our commitment to these principles when we set and disclosed our representation goals and shared the results of our pay equity analysis.. In connection with this initiative we are working with the SEIU to file shareholder proposals at the following banks for the 2021 proxy season. Clearly theres a strong shareholder demand that companies need to do more than just issue reports on their good deeds, said Dieter Waizenegger, the executive director of SOC Investment Group, one of the shareholder groups leading the charge on proposing such audits.

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