While, on the face of it, board diversity reporting may appear to be less of a priority, Brian Valerio, senior vice-president at Alliance Advisors, shared with Insightia that the issue has benefitted from advanced regulatory action, making shareholder proposals on this topic somewhat redundant. One such example is the SEC’s decision in late 2021 to approve Nasdaq’s new board diversity reporting requirements. Under the new rule, companies listed on the Nasdaq exchange must feature a minimum of two diverse directors on a “comply or explain” basis, as of August. The New York Stock Exchange (NYSE) will likely face pressure to adopt similar reporting requirements. The next steps With board-level diversity disclosure becoming increasingly accessible to shareholders, investors will likely focus on obtaining broader, company-wide diversity data in the coming season. Shareholders are now directing their attention toward disclosure of the “retention, recruitment, and promotion of traditionally underrepresented groups” in U.S. businesses, Valerio said, in order to understand what companies are doing to “provide opportunities to those that traditionally have been left out of senior management roles.” The nine proposals seeking reporting on diversity and inclusion efforts this season won 32.7% average support, with one proposal at Tesla winning 56.9% support. Responsible advocacy group As You Sow has already launched such an initiative, filing proposals asking S&P 500 companies to report on the recruitment, retention, and promotion rates of diverse employees. Companies such as Nike have already succumbed to public pressure, agreeing to disclose this data after engagement with investors.
The Proxy Voting Annual Review 2022