We watched along with a horrified nation as yet another black man suffered and died at the hands of white police officers protected by centuries of institutionalized racism and we asked ourselves what could we do? What could we do that would be more than a symbolic statement of solidarity? Something that would put meaning in our mission, Investing in Service to Life, by using the power we have as investors to demand real change.
Economic disenfranchisement is one of the many ways that institutional racism endures in our world today and one which companies, even the best companies, perpetuate through persistent disparities in pay and opportunity. We cannot change what we cannot see, so we are asking companies to become radically transparent and to publish their median racial and gender pay gap data.
We sent this letter directly to each of the companies in our portfolio and publish it now as an open letter to all companies.
June 8, 2020
To Corporate CEOs:
In the last week our nation reached a breaking point, triggered by brutality so horrifying it is seared in our minds. But this was not, sadly, an anomaly. It was fueled by generations of inequity. We therefore ask you, today, to take an active and meaningful step toward solving the institutionalized inequality that has forced good people across the country to take to the streets. We ask that you publish median gender pay gap data across your workforce.
Black women working full-time earn just 62% of what men make, and Latine women, only 54%.1 At the current rate of improvement it will be more than a century until black women reach pay parity with men, and more than two hundred years for Latin women.2 This isn’t just a crime against the black and brown women of our nation, it is also an economic disaster. The World Economic Forum estimates that the gender pay gap costs the United States $1.2 trillion dollars annually.3
As investors, as citizens, as humans, we ask that you be part of the solution. The first step in the solution is transparency. We cannot change what we cannot see. Some U.S. companies have started to report statistically adjusted pay data assessing the relative pay of men and women, or the marginalized and non-marginalized, for comparable jobs. But statistically adjusted pay data isn’t good enough. To see the true racial and gender pay gap, we need to see median racial and gender pay gap data across the workforce. Otherwise, we can’t see that women, especially women of color, disproportionately hold lower-paying jobs.
The second step is opportunity. Transparency is a start, but it isn’t enough. Equal pay for equal work doesn’t tell us if women have access to the same jobs as men. Especially, it doesn’t tell us if non-white women have access to the same jobs as white men. As long as we, as you, can hide behind statements about equal pay for equal work, we don’t have to do the harder job of tackling equal access to opportunity. When women, especially non-white women, lack opportunity it is not only bad for them, it is bad for you and it is bad for us as investors. Research shows that companies with more diverse leadership perform better. A 2018 McKinsey study showed that companies with the most gender diversity on their executive teams were 21% more likely to perform better than their industry average, than companies with the least gender diversity. The difference is even more stark for ethnic and racial diversity. The same study showed a 33% improvement from more ethnically and racially diverse teams over less diverse teams.4 Getting this right matters. It matters from a moral perspective and it matters from a performance perspective.
Racial and gender pay gap transparency will be good for you and good for us, as investors,. It will lead, ultimately, to more voices at the table. Where there are more voices, there is better management. Where there is better management, we all do better. So, again, as humans, as citizens, as investors, we urge you to publicly release an annual report on your median gender pay gap.
Dorrit Lowsen, President and COO
Andrew Rodriguez, CEO and CIO
Hunter Lovins, Chief of Impact
Dan Carreno, Director of Shareholder Advocacy
You can show you support the demand that companies divulge median racial and gender pay gap data by supporting our public petition at YourStake.org.
Disclosures, Definitions & Footnotes