Further to its letter to boards in August 2020, which we reported on here, State Street's just-released annual CEO letter regarding its 2021 proxy voting agenda communicates its expectations for board and workforce racial and ethnic diversity disclosure and practices. Consistent with the August 2020 board letter, its new "Guidance on Enhancing Racial and Ethnic Diversity Disclosure" reflects these public disclosure expectations for portfolio companies:
- Strategy Articulate the role diversity (of race and gender, at minimum) plays in the firm’s broader human capital management practices and long-term strategy.
- Goals Describe what timebound and specific diversity goals (related to race and gender, at minimum) exist, how these goals contribute to the firm’s overall strategy, and how these goals are managed and progressing.
- Metrics Provide measures of the diversity of the firm’s global employee base and board, including:
- Workforce Employee diversity by race, ethnicity and gender, broken down by industry-relevant employment categories or levels of seniority, for all full-time employees. In the US, companies can use the disclosure framework set forth by the United States Equal Employment Opportunity Commission’s EEO-1 Survey. Non-US companies are encouraged to disclose this information in alignment with SASB’s guidance and nationally appropriate frameworks.
- Board Diversity characteristics, including gender and racial and ethnic makeup, of the board of directors.
- Board Diversity Articulate goals and strategy related to racial and ethnic representation at the board level, including how the board reflects the diversity of the company’s workforce, community, customers and other key stakeholders.
- Board Oversight Describe how the board executes its oversight role in diversity and inclusion.
The associated new proxy voting guidelines aim to reflect and promote these expectations:
The new guidance also references State Street's "Voting Framework for Diversity-Related Shareholder Proposals" that was included in its Q3 2020 Proxy Season Review (previously reported on here).
In addition to racial and ethnic diversity, State Street will continue to prioritize its stewardship activities on climate change risk mitigation, with specific focus in 2021 on companies particularly vulnerable to climate change transition risks.
See these articles from ESG Today and FT and additional resources on our Institutional Investors page.