Investors target giant corporations over guidelines on gender equality
Zevin Asset Management has approached more than a dozen firms about paid-family-leave policy
NEW YORK— Investors focused on social issues are finding that trickle-down diversity doesn’t work.
For years, they surmised that having enough women on boards and in senior management would produce fairer policies. Now investors are changing tactics, saying it’s not enough and that employers also need to implement gender-pay equity and paid-leave policies that attract and retain women.
Zevin Asset Management, in a first-of-its-kind shareholder proposal, is asking Starbucks Corp. Monday to prepare a report on its new paid-leave policy that took effect Oct. 1, saying the approach is “particularly unequal.” The coffee chain offers 18 weeks of paid leave for mothers in corporate headquarters and just six weeks for those who work in its stores, while also excluding fathers. Adoptive parents are eligible for six weeks of paid leave under a separate benefit.
“This is an employment discrimination situation waiting to happen,” said Pat Tomaino, associate direc- tor of socially responsible investing at Boston-based Zevin, which holds more than 61,000 Starbucks shares valued at about $3.3 million (U.S.). “We want to focus on companies that are managing human capital appropriately and attuned to investing in women’s career paths. Such a big divide between headquarters and the front-line workforce can erode morale.”
Jaime Riley, a Starbucks spokesperson, said the policy announced in January is “exceptional” for a retailer because it’s offered to employees who work a minimum of just 20 hours a week, without a tenure requirement.
“We take a competitive approach and evolve our benefits based on ongoing conversations with our partners as we learn more about their different benefits needs and preferences,” Riley said in an email. The company also offers 12 weeks of unpaid leave to all eligible part-time workers in its stores, including those with adopted and foster children, Starbucks said in a followup email on Monday.
Zevin has approached more than a dozen major companies about their paid-family-leave policies — including Costco Wholesale Corp., United Parcel Service Inc., Amazon.com Inc. and Apple Inc. — and plans to file more proposals in coming months. The pressure on firms to deliver is higher now, Tomaino said, noting a lack of action on paid-leave policy from the U.S. government.
Another asset manager, Arjuna Capital, filed nine shareholder resolutions last year over gender pay gaps at technology companies. Of those, Facebook Inc. and Google parent Alphabet Inc. “failed to take meaningful action,” Arjuna said in a statement last week.
“Today, Alphabet is under fire for its lack of transparency on gender-pay equity, making it subject to federal, class action, and shareholder actions,” Arjuna managing partner Natasha Lamb wrote in a Sept. 26 letter to Alphabet chairperson Eric Schmidt.
Google reported earlier this year that women are paid 99.7 per cent of what men make and has already provided the methodology it uses to determine equitable pay that Arjuna is asking for, a Google spokesperson said. Last month, three women who worked at Google in recent years filed a class-action lawsuit in San Francisco Superior Court, accusing the company of systematically paying male employees more than their female counterparts. Google has said it disagrees with the lawsuit’s central allegations and that it has “extensive systems in place to ensure” fair pay.
Corporate policies and practices on gender issues are “the next frontier” for investors, said Suzanne Biegel, a senior adviser at the Wharton Social Impact Initiative and founder of Catalyst at Large, a consulting firm that focuses on investing through a gender lens.
“Unfortunately, there isn’t necessarily a correlation between having women on the board and in the Csuite and having fair policies and practices,” Biegel said in an interview.
Investors, meanwhile, still remain focused on getting more women on boards and into senior management. State Street Corp., the $2.6-trillion asset manager, voted against director slates this year at about 400 companies that lacked female board representation.
The firm’s SPDR Gender Diversity exchange-traded fund focuses on companies that have greater gender diversity in senior leadership. BlackRock Inc., the world’s biggest money manager, said it supported eight of nine shareholder proposals on board diversity this year and opposed board members at five companies that failed to address it.