Asset AllocationFebruary 21, 2023

New York State Comptroller Files Diversity Proposals

Thomas DiNapoli is calling for more accountability from portfolio firms regarding corporate diversity, equity and inclusion.

Reported by Michael Katz

New York State Comptroller Thomas DiNapoli has filed several shareholder proposals seeking to improve corporate accountability for diversity, equity and inclusion measures at several portfolio companies held by the state’s $242.3 billion pension fund.

The proposals were filed with Universal Health Services Inc., Brinker International Inc., Humana Inc., Elevance Health Inc., Centene Corp., Molina Healthcare Inc., Activision Blizzard Inc., Pinterest and Wells Fargo & Co.

The proposals DiNapoli filed at Universal Health Services and Brinker International ask the companies to disclose employee recruitment, retention and promotion rates, and to break down pay by gender, race, ethnicity, sexual orientation, age, disability and veteran status.

The proposals sent to Humana and Elevance Health call on the companies to produce reports that analyze racial and ethnic disparities in health-care outcomes. DiNapoli is seeking detailed information on the extent of racial and ethnic disparities, as well as information about any impediments to collecting the data and what the companies are doing to eliminate the disparities. However, DiNapoli withdrew the proposal with Humana after it agreed to publish a report identifying and addressing racial and ethnic health disparities.

Activision Blizzard, Pinterest and Wells Fargo received proposals asking them to publicly report on their efforts to prevent harassment and discrimination, including the number of pending complaints; the number and dollar amounts of settlements; and the number of enforceable contracts that contain concealment clauses restricting discussion of harassment or discrimination. The proposals at Pinterest and Wells Fargo were co-filed by New York City Comptroller Brad Lander and three of the New York City Retirement Systems’ funds.

DiNapoli had also refiled a shareholder proposal with Chipotle seeking an independent audit of the restaurant chain’s practices related to civil rights, racial equity, diversity and inclusion and how these affect the company’s business. However, he withdrew the proposal after Chipotle announced it launched an independent third-party audit analyzing its impact on civil rights, equity, diversity and inclusion.

“We encourage the fund’s portfolio companies to ensure diversity, equity and inclusion throughout their businesses not just because it is the right thing to do, but because they will be better positioned to prosper in the long-term,” DiNapoli said in a release. “As a major investor, focused on safeguarding our pension fund’s long-term value, we call on portfolio companies to adopt best practices that benefit their bottom line.”

DiNapoli said he is also writing to New York State Common Retirement Fund portfolio companies for information about board and workforce DEI policies and practices. The letters will be sent to 75 of the largest Russell 1000 Index companies that lack sufficient board diversity, according to the pension fund’s proxy voting guidelines. Companies set to receive the letter include JPMorgan Chase & Co., Costco Wholesale Corp., Netflix Inc., Citigroup Inc., Moderna Inc., Dell Inc., and Caesars Entertainment Inc..

According to NYCRF proxy voting guidelines, the fund will vote against:

All incumbent board nominees at companies with no board directors identifying as an underrepresented minority;
All incumbent nominating committee nominees when a board has just one director identifying as an underrepresented minority;
All incumbent nominating committee nominees at companies that do not disclose the self-identified individual racial/ethnic diversity of their board directors; and
All incumbent nominating committee nominees at companies that do not explicitly consider both gender and racial/ethnic diversity in their search for directors.