2022 Proxy Season Wrap-up: Stubborn Optimism

Stubborn optimism needs to motivate you daily; you always need to bear in mind why you feel the future is worth fighting for.

–Christiana Figueres

In the world of shareholder engagement and advocacy, summer is the quiet season. The hustle of annual meetings is over, and the fall shareholder proposal filing deadlines are still on the horizon. It is the season to reflect on the results of the last year and plan for the year ahead. It is the time to consider deeply why we do this work and for whom, and to dust off that vision of the future we seek.

This past proxy season was momentous in a few ways: Two of our proposals earned majority votes (a first for Clean Yield); we negotiated for a rail company to acknowledge publicly how it benefits from slavery – and how it plans to rectify that through its political involvement; and we filed and presented a proposal on the biggest issue of the spring at the biggest employer in the country. While these things don’t all translate into the outcomes we seek – the dismantling of systemic racism, equitable and inclusive workplaces, a slowing of climate change, and a stronger democracy – they are part of a wall of steady pressure (from other investors, employees, the media, the general public) on companies to move forward on progressive issues. This is a report on our role in pushing for progress this year and the embodiment of our stubborn optimism.

As a small company, Clean Yield has chosen to focus our engagements thematically – and in concert with many other stakeholders – for maximum impact. Over the last several years, our advocacy has focused on three pillars: equity and inclusion (including access to reproductive care), climate change and the environment, and democracy. The specific goals of our engagements have evolved over the years to reflect the changing landscape. Where we used to press for transparency around corporate carbon footprints and political involvement, we now expect companies to set and report on their science-based greenhouse gas reduction targets and the alignment of their political involvement with their corporate values and policies. In equity and inclusion, we used to ask for workforce diversity data or gender pay equity reports; we now press companies to assess the human capital risks of reduced access to reproductive care for workers and to perform racial equity audits. The evolution of our expectations of companies reflects how society, public policy, and corporations are changing. It also indicates progress in our work.

This year, four engagements stood out to us: Walmart on risks related to reduced access to reproductive care, CSX on squaring its commitment to being an antiracist company with its ties to slavery, IBM on the role that concealment clauses (confidentiality agreements, non-disparagement agreements, and mandatory arbitration clauses) play in enabling persistent workplace harassment and discrimination, and Johnson & Johnson regarding a repeat racial equity audit request. We engaged with many more companies this year and filed several additional proposals. We encourage you to check out the table at the bottom for the full rundown on this year’s shareholder advocacy.

Walmart: Access to Reproductive Care

Walmart is one of the largest employers in the country. It has employees in every state, and its workforce is 55% female. Walmart employs nearly 1 million women. For the last several years, we have sought to engage Walmart about how it can support its employees in the face of new state laws limiting abortion access and the possible overturning of Roe v. Wade. This work has been done in partnership with Rhia Ventures, a group that wrote the business case for ensuring access to reproductive care.

When dialogue with Walmart proved unsuccessful in 2020, we decided to file a proposal asking the company to report on how these new laws would impact its employees. We were concerned that failing to ensure access to comprehensive reproductive care could result in increased employee turnover, challenges in recruiting, and reputational harm. The SEC, the federal agency that regulates the shareholder proposal process, determined that the company could exclude that proposal. Undeterred (and with a shareholder-friendlier SEC in place), we filed a similar proposal in 2021. The SEC decided that the proposal could go to a vote at the Walmart annual meeting on June 1, 2022. While we knew that this year’s proposal would be timely, as the Supreme Court would be deliberating major changes to Roe, the leaking of the draft Supreme Court decision to overturn Roe on May 2, 2022, ignited the issue. Almost immediately, corporations started rolling out new abortion travel policies, and the media fanned the flames. Walmart was mum. Though our proposal earned only 12% support at the June 1 annual meeting due to significant ownership by Walmart insiders (we estimate the outside vote was over 30%), we felt that the media spotlight on the company surely put pressure on Walmart’s management and board.

In August, Walmart made a surprise announcement. It disclosed that it would expand its benefits to cover abortions when “there is a health risk to the mother, rape or incest, ectopic pregnancy, miscarriage or lack of fetal viability.” It will also provide travel coverage when an abortion, in these limited situations, can’t be obtained locally. While this does represent an improvement in Walmart’s coverage, it fails to cover the majority of abortions, which are sought for elective or nonmedical reasons, and in doing so makes it harder for its employees to access these types of abortions. We expect some Walmart stakeholders (including employees) to be deeply unsatisfied by this development. We aim to stay at the table with Walmart on this issue.

CSX Corporation: Antiracism and Political Involvement

In 2021, Clean Yield began making reparations payments as a way to repair the harm we have caused and benefited from, and in recognition of our unearned privilege. While doing our homework on reparations the year prior, we came across a shareholder proposal that asked CSX to make reparations for its ties to slavery. The proposal was excluded by the SEC, but we were fascinated by the idea of incorporating reparations into shareholder proposals. We reached out to the filer of that first reparations proposal and decided that with her idea and passion and our knowledge of shareholder proposals and commitment to racial equity, we might be able to hold this company accountable for the ways in which it has and continues to benefit from the labor of people who were enslaved.

Together, we developed a new shareholder proposal that touts CSX’s clear and strong commitment to being an antiracist company, contrasted it with the company’s ties to slavery, and asked for a report detailing how its commitment to antiracism shows up in its public policy work and lobbying. We were pleased to find that CSX was interested in engaging with us about the proposal. We agreed to withdraw our proposal in exchange for CSX’s commitment to issue a public report on alignment of CSX’s political contributions and lobbying activities with the company’s commitments to antiracism and an acknowledgement of how its ties to slavery have informed its commitments to being an antiracist company. We expect the report to be out by year-end and are hopeful that it will become a model of how antiracist companies can demonstrate their commitments in the political realm.

IBM: Concealment Clauses and Discrimination

In 2018, ProPublica and Mother Jones published a report detailing age discrimination at IBM. In 2020, the Equal Employment Opportunity Coalition (EEOC) found that IBM had engaged in systematic age discrimination when it laid off older workers in an attempt to decrease the age of its workforce. There were also indications that laid-off workers were required to agree to concealment clauses in order to receive their severance. Concealment clauses, including confidentiality agreements, nondisparagement clauses, and mandatory arbitration provisions, are one of the ways that companies can mask workplace harassment and discrimination.

While the IBM allegations were coming into focus, there was also a campaign for states to ban the use of concealment clauses, largely spurred by the #MeToo movement. As investors, we have concerns that as these clauses become unenforceable (at the state level), IBM may face a tsunami of new discrimination claims formerly hidden by concealment clauses. This could result in increased legal costs and reputational damage for IBM. It could also impact the company’s ability to recruit and retain talent in a competitive marketplace. Won’t those younger workers that were brought in wonder about their future with IBM once they advance in age? Because of these concerns, we asked the company to assess the risks posed by the use of these clauses. Investors agreed, and the proposal earned 64% support, making it the first time a proposal filed by Clean Yield won majority support. We’ve reached out to the company since and have been told that the board is “reviewing options to respond to [our] proposal.”

Johnson & Johnson: Racial Equity Audit

For the last few years, we have been part of a coalition of investors, led by Trillium Asset Management and Mercy Investment Service, that asked J&J’s board to hire a third party to perform a racial equity audit of the company. Specifically, the proposal states the following:

To combat systemic racism, corporations should recognize and remedy industry- and company-specific barriers to everyone’s full inclusion in societal and economic participation. Racial gaps cost the U.S. economy an estimated $16 trillion over the past twenty years. Closing the Black- and Hispanic-white wealth gaps could add 4-6% to U.S. GDP by 2028.

While we believe that every company has a role to play in closing the racial wealth gap, J&J has made decisions in the past that call into question the company’s commitment to diversity and inclusion. In the proposal, we raised concerns about the company’s decision to end the sale of talc-based products in North America while continuing it elsewhere – and allegations that the company aggressively marketed these products, which have been linked to cancer in Black and brown women.

Our proposal earned majority support from J&J shareholders, and in August, J&J announced that it would end the sale of its talc-based products globally. While we still believe that a racial equity audit is in the best interest of J&J and its shareholders, we’re pleased to see the company end sales of these troubling products altogether.

Check out the full list of proposals filed and co-filed by Clean Yield this season.

*Walmart has significant inside ownership. It has been estimated that the vote in support among outside shareholders was over 30%.

You can also view our proxy voting record for the 2022 season here.

As always, we invite you to reach out with questions.