Three of the country’s largest banks are asking shareholders to reject racial equity resolutions after expressing solidarity with the Black Lives Matter movement last year.
Citigroup Inc. C,
Wells Fargo & Co. WFC,
and Bank of America Corp. BAC,
They were among the many large US companies to make public statements of support in response to widespread protests last summer, following the police killings of George Floyd and Breonna Taylor. In recent days, everyone has officially opposed calls from shareholder groups to conduct and publicize racial equity audits and other changes, saying they are already doing enough to resolve equity issues.
The shareholders’ proposals urge banks to examine their practices and policies and identify ways to “avoid adverse impacts on non-white stakeholders and communities of color”, something that banks say is unnecessary because they are juggling different related initiatives and / or committed money to such issues internally and externally. The proposals are included in proxy statements to shareholders, which allow companies to support or oppose shareholders’ resolutions and explain the reason before a vote at their annual meetings.
For more information: companies declared ‘black lives are important’ last year and are now being asked to prove it
The CtW Investment Group wrote in its proposal to Citi shareholders that the bank “has a conflicting history when it comes to dealing with racial injustice in the communities it serves”. The group provides examples, including Citi being fined by the Treasury Department in 2019 for not offering discounts and mortgage credits to all customers; their required minimum maintenance fees and minimum daily balances; and the fact that there is only one black executive on the board (chief financial officer, Mark Mason).
“While we disagree with the general approach to this proposal, we are fully in line with its stated goal of addressing racial inequality in the financial sector,” said Citi in its power of attorney filed on Wednesday.
The bank noted its $ 1 billion commitment to providing greater access to banks and mortgages to communities of color, as well as making investments in black businesses. He also said: “Recently, in September 2020, Citi released a 104-page report on the economic cost of black inequality in the United States entitled ‘Closing the racial inequality gaps'”, and said that its efforts on these issues are available to the public.
Citi is also recommending to shareholders to vote no on some other resolutions related to racial equity, such as adopting a “Rooney Rule” policy to increase diversity on its board of directors and publicize its direct and indirect lobbying activities in a report.
See also: Women can pave the way for ESG investments in the US
The CtW also mentioned the minimum requirements for deposits and fees in its Bank of America resolution, adding that the Treasury Department concluded in 2018 that the bank offered proportionately less property loans to minorities than white candidates in Philadelphia, and that the board of directors of the BofA is only 8% Black.
Bank of America said in its power of attorney released last week that it has committed $ 1 billion to support minority-owned businesses, employment initiatives in black and Hispanic communities, affordable housing and donations to historically black colleges and universities and more. He also praised his work with “consumer advocates in the design and marketing of our financial products and services” and his efforts to diversify his workplace and leadership.
In its proposal at Wells Fargo, the Service Employees International Union Pension Plans Master Trust mentions the bank’s history of discriminatory credit practices that led to different lawsuits and an agreement with the Department of Justice in 2012, as well as discrimination claims agreements at the job .
Wells Fargo, which released its proxy on Tuesday, said it was conducting a “human rights impact assessment” and would release a summary of these results and the actions it plans to take in response. The company also said it is making efforts to achieve diversity, equality and inclusion in its workplace and among its top echelons.
Dieter Waizenegger, executive director of CtW, worked with SEIU on shareholder proposals. Although he said that he “welcomed” the promises of banks on issues of racial equality and justice, “as investors, we believe that a critical part of this work is an independent assessment of the effectiveness of these promises”.
Read: This California investor envisions a 10-year ‘good economy’ revolution that will push the shared economy aside
Shareholder groups also pointed out that banks’ political and charitable donations contradicted their stated commitments to justice and equity.
Wells Fargo “made a donation to Senator Tom Cotton, who called for military air strikes to the Black Lives Matter protests, as well as to other members of Congress with a racist background,” says the resolution of SEIU shareholders.
The CtW said that “Citi donated US $ 242,000 during the 2020 electoral cycle to 74 members of Congress who are classified as ‘F’ by the NAACP”, and that Bank of America was involved in issuing “mandatory judgment bonds , part of which was used to pay for police-related settlements ”in Los Angeles.
Both Wells Fargo and Bank of America donated to police departments that “bypass the normal equipment procurement processes for police departments, including surveillance technology that has been used to target communities of color and non-violent protesters,” say shareholder resolutions.
Goldman Sachs Group Inc. GS,
Morgan Stanley MS,
and JP Morgan Chase & Co. JPM,
are facing similar proposals from shareholders and have not yet released their powers of attorney. This article will be updated when that happens.