Labor unions have long leveraged the power of their significant wealth — currently some $250 billion in pension funds — to pressure companies to change their ways. SOC Investment Group was set up by a coalition of unions representing more than 4 million members to focus those efforts and champion labor’s cause through shareholder activism. And Tejal Patel , SOC’s director of corporate governance, is at the forefront of those campaigns. After the 2020 murder of George Floyd in Minneapolis, Patel began pushing a new type of shareholder demand — the civil rights audit. SOC and its union partners, including the Service Employees International Union, or SEIU, began asking companies to take a close look at their records on social justice and racial equity. Almost immediately, the group scored victories. While it lost votes at Wells Fargo & Co., Goldman Sachs Group Inc. and Bank of America Corp., among others, it did get surprising support. Now investment giant BlackRock Inc., Citigroup Inc. and meat packer Tyson Foods Corp. have agreed in recent months to conduct audits. On March 4, Apple Inc. shareholders voted in favor of a civil rights audit after employees raised questions about pay equity and diversity in the executive ranks. And on March 24, JPMorgan Chase & Co., the country’s biggest bank, said it would hire an independent firm to audit its $30 billion racial equity project, which is designed to close the racial wealth gap. JPMorgan directors just last year had urged shareholders to oppose an audit, saying that the bank already was committed to advancing racial equity. Patel talked with the Long Game about civil rights, holding companies accountable, and her graduate-school dissertation. This interview has been edited for length and clarity. Civil rights audits are a new thing, with the first wave of shareholder proposals surfacing last year. Why now? There were three civil rights audits that companies had sort of done on their own volition, which were at Airbnb, Facebook, and Starbucks. What led us to develop the proposal with the SEIU was the racial justice protests following George Floyd's murder. We started reevaluating how we were drafting shareholder proposals because we felt as though most of the ones that we had been using beforehand didn't have enough teeth to them. They asked for disclosure, maybe the development of a committee at the board level, increased board diversity. Those are all good things, obviously. But it doesn't get to this sort of tangible assessment process that a racial equity or civil rights audit does. How is an audit a step up? Lots of companies started funding different organizations, putting in a lot of money and making very, very lofty statements about racial equality. But you don't really know if anything's actually happening. It's great that JPMorgan, for example, has allocated $30 billion, that's not a small amount of money. We want them to allocate that money effectively, as shareholders but also as stakeholders. An audit like this makes sure that when it's done it's done objectively. It makes sure that groups that should be getting this money are getting the money, makes sure that the company is addressing any kind of implicit bias in their policies. That's a big one. Legal bare minimums don't always address every form of discrimination that exists. And so a lot of what this audit — at least in the banking industry and many other industries, too — is supposed to accomplish is for companies to be able to address unintentional bias. But it’s JPMorgan. They have a lot of smart people who are experts at spending money. The board and management are very, very well-versed at running a company. I have yet to see any company, management structure or board structure that has individuals on it that have core competency in civil rights-related work. Last year, when you began these campaigns, what sort of reception did you get? The general reception was, “We're already doing this. We know the company best, so we don't need somebody from the outside. How could they possibly understand us?” The first proposals got pretty strong votes, especially when compared to other social questions. Why do you think that is? It exceeded the average shareholder proposal support level pretty significantly. I think it was very much the racial justice protests. I think it was George Floyd’s murder. I think it was this idea that shareholders couldn't stand on the sidelines anymore. Somebody had to hold these companies accountable for their lofty statements, for the policies that they make that impact Black and Brown communities. This was the moment to do it.
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