Racial Equity AUDITING

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Corporate racial equity or civil rights audits are a mechanism for uncovering and addressing harms and disparate outcomes for a corporation’s internal and external stakeholders, and, in turn, the ways in which that corporation contributes to systemic racism more generally. Beginning with an engagement between Color Of Change and Airbnb in 2016, corporate racial equity audits are an “independent, systematic examination of significant civil rights and racial equity issues that may exist in a company [which] provides a plan of action to address those issues in a thorough, deliberate, timely, and transparent manner,” as described by civil rights audit pioneer Laura Murphy.

An increasing number of racial equity audits that have been filed and will appear on proxy statements in coming months. Civil rights organizations have articulated standards to ensure that corporate racial equity audits adhere to principles and practices that enable them to fulfill their purpose:

  • Select an independent person or firm with civil rights and racial justice expertise and adequate resources to complete the audit. 

  • Ensure the audit comprehensively examines how corporate policies, practices, and products can either ameliorate or exacerbate racial inequalities. 

    • Audit processes should include proactively identifying and reaching out to BIPOC stakeholders who are disproportionately impacted by racial inequity at corporations, as well as provide pathways for stakeholders to engage. 

    • The company and the auditor should make a clear commitment that any stakeholder who does participate in the audit will be protected from any form of retaliation, intimidation, or disciplinary action. 

  • Publicly release audit findings, recommendations, and progress reports under clear timelines, with action plans for the issues identified.

Proposals calling for racial equity or civil rights audits at major corporations have received substantial shareholder support. These proposals saw increased support from shareholders in 2022, with average support increasing from 33 percent to 44 percent, and six receiving majority support, up from the 2021 season in which none of the eight proposals received majority support, but seven received more than 20 percent support. 

Comprehensive independent corporate racial equity audits should be standard practice as a complement to company disclosures and targets. Majority Action and SEIU call on all companies to undergo a racial equity audit, unless a racial equity audit was done in the last 5 years and the company has established a governance mechanism for ongoing oversight of racial equity across their products, practices, and policies. 

In the 2023 season, Majority Action and SEIU are tracking racial equity audit proposals

  • Bank of America Corporation (NYSE: BAC), April 25, 2023, Shareholder Proposal Requesting a Racial Equity Audit, Item 11

  • The Coca-Cola Company (NYSE: KO), April 25, 2023, Shareowner Proposal Requesting an Audit of the Company’s Impact on Nonwhite Stakeholders, Item 5

  • Goldman Sachs Group Inc. (The) (NYSE: GS), April 26, 2023, Shareholder Proposal Regarding a Racial Equity Audit, Item 8

  • Geo Group Inc (The) (NYSE: GEO), April 28, 2023, Shareholder proposal regarding a third-party racial equity audit and report, Item 5

  • Valero Energy Corporation (NYSE: VLO), May 9, 2023, Stockholder proposal - Oversee an Independent Third-Party Racial Equity Audit, Item 6

  • American Water Works Company, Inc. (NYSE: AWK), May 10, 2023, Shareholder Proposal: Racial Equity Audit, Item 5

  • Altria Group, Inc. (NYSE: MO), May 18, 2023, Shareholder Proposal – Commission a Civil Rights Equity Audit, Item 8

  • AT&T Inc. (NYSE: T), May 18, 2023, Stockholder Proposal - Racial Equity Audit, Item 6

  • Chevron Corp. (NYSE: CVX), May 31, 2023, Stockholder Proposal to Report on Racial Equity Audit, Item 10

  • Walmart Inc. (NYSE: WMT), May 31, 2023, Racial Equity Audit, Item 7

  • UnitedHealth Group Incorporated (NYSE: UNH), June 5, 2023, Shareholder Proposal Seeking a Third-Party Racial Equity Audit, Item 5

  • Comcast Corp. (NASDAQ: CMCSA), June 7, 2023, Shareholder Proposal to Perform Independent Racial Equity Audit, Item 7

  • The Travelers Companies, Inc. (NYSE: TRV), May 24, 2023, Shareholder Proposal Relating to a Racial Equity Audit, Item 8