Our efforts to increase transparency on diversity data


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By John WilsonDirector of Corporate Engagement, Calvert Research and Management

Washington - Calvert has advocated for greater corporate workforce diversity for decades, and increasingly investors and corporate leaders are recognizing the value of diversity as a driver of financial performance over the long term. Because research indicates that diversity is likely material to company performance, investors require consistent, comparable and complete information about diversity performance. However, this information is often lacking.

Companies currently provide this information to the U.S. government through the Equal Employment Opportunity reporting standard known as the EEO-1 report, but they are not required to release this information publicly and most currently keep the reports private. We believe corporate commitments to diversity are credible only if the company releases full EEO statistics on its workplace demographics.

What Calvert asks - and why

Companies with a U.S. workforce of at least 100 workers — and those with over 50 employees and a contract of $50,000 or more if they are a federal government contractor or a Tier 1 subcontractor — are required to produce an EEO-1 report annually. The report provides details about the company's workforce, broken down by several racial and ethnic categories and by gender at each of 10 professional levels. But companies are not required to release the information except in certain circumstances, such as a lawsuit. Calvert is asking companies to make their EEO-1 reports public, and for companies to release their pay equity data.

We are focusing on disclosure because it adds the necessary transparency about what companies are doing when they tout their diversity efforts. Companies often report in general terms about diversity programs and management systems, but do not report in detail about how these programs are executed. This lack of transparency means material information is either not disclosed to investors or disclosed in a way that is not consistent, comparable or complete. More than half of the largest 100 U.S. companies disclose only partial data and about one-third disclose no diversity information despite having this data collected in a comparable manner, as required by law and reported to the EEOC.

Investors, academics and the public are therefore prevented from seeing it, diminishing our collective understanding of the structural challenges companies are potentially grappling with alone to improve their diversity efforts. Opacity also prevents shareholders and stakeholders from holding companies accountable to the public pronouncements they make in support of diversity.

Calvert's EEO-1 engagement

Calvert has written to 100 of the largest companies in our portfolios asking them to publically release the information they provide the U.S. government in their EEO-1 reports. Of these, 15 were already releasing the data. For those that do not currently disclose the report, we asked for a meeting to allow us to explain why we think doing so is important. We have also reached out to other investors to encourage them to support this initiative, and to coordinate with those that are already committed to the issue.

As of January, we have received responses from more than three-quarters of the companies, and 27 have newly agreed to release this report. We will continue dialogue with these companies to ensure that they follow through on their commitments. For those companies openly declining to disclose or failing to acknowledge our request, we have filed 16 resolutions and will consider filing additional shareholder resolutions to encourage transparency.

Bottom line: Investors and companies would both benefit from greater EEO-1 disclosure. Investors could better pinpoint concerns and opportunities for improvement, while companies would be incentivized to prioritize effective diversity initiatives. Transparency would also help inform companies and the public about the nature and extent of the challenges faced in achieving equity, and would enable information-pooling and sharing to allow collaboration to develop improved solutions to diversity challenges.