New Coalition to Big Investors: Explain Your DEI Votes

“Traditional activism” continues for DEI proposals in 2024, with a few new twists, according to a surprisingly even-handed review by Vivek Ramaswamy’s famously “anti-woke” investment firm, Strive Asset Management. The firm, under new management, has stepped away from the politically-charged rhetoric that made it famous, as evidenced in this by-the-book analysis of the proxy voting landscape.

Why it matters: 2023 saw an increased number of DEI shareholder proposals, with 109 that went to a vote. 

• Although the average support rate was lower than in the past, in many cases the company made the requested change, rendering the vote itself moot. 
  
  
• Strive drives this point home, claiming that BlackRock, Vanguard and other big investors are merely quieting their discussion of ESG rather than moving away from it. 

What to expect in 2024: The report details major categories of DEI resolutions submitted so far, including the continuation of calls for racial equity/civil rights audits, pay gap reporting, and EEO-1 disclosure. 

• New in 2024 are AFL-CIO proposals calling for adoption of ethics policies associated with AI, including around racial discrimination and bias. 
  
  
• Also breaking new ground: a coalition of social and faith-based investors filing shareholder resolutions at major asset managers (including BlackRock, State Street, etc.) demanding an explanation for declining support of DEI resolutions. 
  
  
• Finally, a proliferation of “anti-ESG” style resolutions calling for companies to stop doing racial equity audits, include conservative political beliefs as a diversity factor, and report on the risks of ESG and DEI (these have increased dramatically but with very low investor support).

Get ready for a proxy season sizzling with debate. 2024 promises to be a battleground for the business, legal, and social implications of corporate DEI and ESG initiatives.