2024 Voting Guide
PROXY VOTING FOR RACIAL EQUITY

Access Majority Action’s vote recommendations in spreadsheet form here.

Besides being a moral failing, racial inequity poses a range of risks that depress returns for long-term diversified shareholders. Fiduciaries must adopt a racial equity lens to proxy voting in order to effectively mitigate these risks, which cannot simply be diversified away. The shareholder proposals listed in this guide do not represent an exhaustive list of proposals that will have a racial equity impact. Rather, they are meant to serve as an example of how responsible investors can build a racial equity lens into their proxy voting policies and practices. For more on proxy voting for racial equity, see Majority Action’s Equity in the Boardroom 2023.

ADVANCING RACIAL EQUITY AT WALMART

Racial Equity Audit Proposal: Walmart is the U.S.’s largest private employer of Black workers, with over 50 percent of its hourly workforce identifying as people of color. ¹ Research shows that Walmart exercises monopsony power in local labor markets, resulting in negative consequences for workers, including depressed earnings. ² As the nation’s largest retailer, grocer, and importer of consumer goods, Walmart’s corporate practices and policies set the standard and have far-reaching impacts on not just the low-wage labor market, but also the retail, grocery, and logistics industries. ³ A racial equity audit would help identify racial disparities in Walmart’s human capital management, business strategy, and corporate practices that present legal, reputational, financial, and operational risks to the company and stymie value creation. A racial equity audit also presents an opportunity for Walmart to improve its business performance in neighborhoods of color. One study found that “Poor customer service is unevenly distributed across Walmart stores in ways that reproduce racial and socioeconomic disadvantage.” ⁴ This dynamic has led to Walmart closing a number of underperforming stores in Black and Latine neighborhoods in recent years. ⁵ A comprehensive racial equity audit could enable Walmart to understand how it can better serve the needs of BIPOC consumers and boost the performance and profitability of its stores in communities of color. Finally, an independent audit would assist Walmart in assessing the effectiveness of its current DEI initiatives and programs.
Living Wage Proposal: Living wages improve firm productivity and lower turnover costs by fostering better worker morale, performance, recruitment, ⁶ and retention. As the nation’s largest private employer, Walmart has an outsized impact on the labor market for hourly wages. In early 2023, Walmart increased the minimum hourly wage for its store associates to $14. ⁷ However, it decreased hourly pay by $1 for a subset of new associates a few months later, citing a cooling labor market. Walmart’s wages fall far short of the $25.02/hour living wage needed to sustain a family of four with two working adults. ⁸ People of color, who comprise the majority of Walmart’s non-managerial workers, make up a disproportionate share of employees who do not earn a living wage. ⁹
Workplace and Gun Violence Safety Proposal: Occupational health and safety failures lead to increased operational costs, as well as legal, regulatory, human capital, and reputational risks. ¹⁰ Research shows that BIPOC workers experience higher rates of work-related diseases, injuries, and psychological distress than white workers. ¹¹ Walmart hourly associates, almost half of whom are people of color, have raised concerns about workplace safety issues including unsafely stacked products, organized theft, and threats of physical assault and/or gun violence from customers and co-workers. ¹² There have been several incidents of gun violence by white supremacists at Walmart stores in recent years, including a 2019 mass shooting that killed 23 people and a November 2023 shooting that injured four people. ¹³
Human Rights Impact Assessment Proposal: Human rights impact assessments are a valuable tool for helping companies uncover human rights risks in their supply chains and operations. In particular, the use of forced labor in supply chains can create financial, legal, reputational, and operational risk to downstream companies. Recent government probes and investigative reporting has drawn attention to the use of forced labor in Walmart’s U.S. supply chain. These jobs, which are highly coercive, unsafe, and low-paying, are disproportionately performed by workers of color who are minors, undocumented, and/or incarcerated. An investigation by the New York Times found that many Walmart suppliers rely on child labor. ¹⁴ Last year, a federal investigation found evidence of forced migrant labor in violation of the temporary agricultural workers visa program on farms that supply watermelons to Walmart. ¹⁵ Walmart also purchases food products from suppliers that source from prison labor programs. ¹⁶

RACIAL EQUITY AND CIVIL RIGHTS AUDIT PROPOSALS

Racial equity and civil rights audits are a tool to identify and address the myriad risks posed by persistent racial disparities. Beyond mitigating risk, racial equity audits can also help companies to build products and services that lead to more equitable outcomes and better meet the needs of BIPOC consumers, thereby helping companies expand their business while fostering a more inclusive and prosperous economy.

DIRECTOR VOTES AT COMPANIES WITH ALL-WHITE BOARDS

Companies with more racial and ethnic board diversity outperform their peers on financial measures such as earnings growth and profitability. ¹⁷ From a governance perspective, more diverse boards are shown to be less susceptible to groupthink and in-group bias, which have long dogged board decision making. ¹⁸ Research shows that increases in racial and ethnic board diversity lead to increases in racial and ethnic diversity at the managerial and staff level, suggesting that diversity practices in the boardroom have a “trickle-down effect” that help to redress barriers to promotion and advancement facing people of color in the workplace. ¹⁹ Majority Action recommends that investors hold directors accountable at S&P 500 and Russell 1000 companies that have nominated all-white candidates to their board of directors.

FREEDOM OF ASSOCIATION & COLLECTIVE BARGAINING PROPOSALS

Research shows that labor unions help to reduce entrenched racial disparities in wages, healthcare access, and economic security. ²⁰ Freedom of association is especially important for workers doubly-burdened by racial discrimination and occupational segregation, because it is what the International Labour Organization calls an “enabling right” that unlocks other workplace rights. ²¹ Supporting the right of workers to organize is also aligned with enhancing firm performance and long-term shareholder value. Unions help improve employee retention, increase productivity, and decrease turnover, enabling companies to weather economic shocks. ²² At a time when U.S. public support for unions is at an all-time high, companies perceived to be interfering with union campaigns also face reputational risks and costs. ²³ Employer interference in collective bargaining acutely impacts workers of color, who are overrepresented in low-wage industries (such as retail and service) and geographies (such as the American South) where many of new unionization efforts are taking hold.

CORPORATE POLITICAL TRANSPARENCY PROPOSALS

Corporations’ political and policy agendas often exacerbate racial disparities and undermine the public-facing statements they make on racial justice. ²⁴ In particular, corporate lobbying has deepened racial inequities by blocking environmental and consumer protection regulations, defeating attempts to raise the minimum wage, and passing laws curtailing people’s right to organize and protest. Unbridled corporate political influence poses risks to the long-term portfolios of diversified investors. While political rent-seeking in the form of election spending or lobbying may help one company, it can cause externalities for other companies, taxpayers, consumers, and workers – which ultimately hampers economic value creation and portfolio growth upon which long-term diversified investors depend. ²⁵ Companies also expose themselves to reputational, financial, and operational risk when they engage in political spending and lobbying activities that do not align with their stated values. ²⁶

2024 Voting GuidePROXY VOTING FOR RACIAL EQUITY

2024 Voting Guide
PROXY VOTING FOR RACIAL EQUITY