Diversity, Equity and Inclusion

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ISS Proposes 2021 Benchmark Voting Policy Changes

On October 14, 2020, ISS released its proposed voting policy changes for 2021. The changes for the United States focus mainly in these three areas: (1) racial and ethnic board diversity, (2) board oversight of environmental, climate and social risks and (3) exclusive forum provisions.

ISS requests feedback on the proposed changes. Market participants can submit comments via email to policy@issgovernance.com through 5:00 PM ET on Monday, October 26, 2020. ISS expects to release its final voting policies in the first half of November 2020.

Over the summer, ISS administered its annual benchmarking voting policy survey to market participants. It plans to use the survey results, which we discussed here, to inform its benchmarking policies.
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SEC Asset Management Advisory Committee Provides Updates on Diversity and Inclusion Research and Recommendations

On September 16, 2020, the SEC’s Asset Management Advisory Committee, or AMAC, hosted a webcast to further discuss diversity and inclusion issues in the asset management industry initially addressed at its last meeting on July 16, 2020.  AMAC has held these meetings to provide incremental updates on its efforts to prepare and deliver to the SEC final recommendations on improving D&I in the asset management industry.  In his opening remarks, SEC Chairman Jay Clayton indicated a hope that these continued discussions would help the SEC and the asset management industry find solutions toward a “shared goal” of expanding the opportunities available to diverse asset managers.
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ISS Releases 2020 Benchmark Policy Survey Results

On September 25, 2020, ISS announced the results of its annual Global Benchmark Policy Survey.  ISS, as in prior years, based its results on the survey responses of investors, public company executives, and company advisors. ISS will use these results to inform its policies for shareholder meetings occurring on or after February 1, 2021. ISS plans to request comments on its draft policies scheduled for release in October 2020, and publish its final policies in mid-November 2020.

While ISS’s 2020 survey included questions targeting both global and designated geographic markets, the key questions affecting the U.S. markets related to (1) ISS’s COVID-19-adjusted policies, including annual meeting formats and compensation; (2) racial and ethnic diversity; (3) climate change risk oversight and disclosure; (4) sustainability reporting; (5) independent board chairs; and (6) auditors and audit committees.
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SEC Called Upon to Take Action on Diversity & Inclusion in the Asset Management Industry

The SEC’s Asset Management Advisory Committee hosted a meeting on July 16, 2020 to discuss the current state of diversity and inclusion (D&I) in the asset management industry.  SEC Chairman Jay Clayton, SEC Commissioner Elad Roisman and Director of the SEC’s Division of Investment Management Dalia Blass opened the meeting.  Each expressed an interest in understanding why minority- and women-owned firms make up only approximately 1.3% of the total assets under management in the global asset management industry. They asked what efforts the industry is taking to increase this percentage.

Meeting participants included Gilbert Garcia of the asset management firm, Garcia, Hamilton & Associates, Robert Raben of the public policy firm, The Raben Group, Juan Martinez of the Knight Foundation, Brenda Chia of the Association of Asian American Investment Managers, Ron Parker of the National Association of Securities Professionals, Solange Brooks of the New America Alliance and Robert Greene of the National Association of Investment Companies.
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SEC’s Q2 Roundtable Offers Insight to Investor Views

On June 30, 2020, Chairman Jay Clayton moderated a virtual roundtable titled “Q2 Reporting: A Discussion of COVID-19 Related Disclosure Considerations” to solicit views from a small panel of highly experienced and well-informed private investors and asset managers (“Roundtable”).  The Roundtable included the following panelists: Gary Cohn, Former Director of the U.S. National Economic Council; Glenn Hutchins, Chairman of North Island and Co-Founder of Silver Lake; Tracy Maitland, President and CIO of Advent Capital Management; and Barbara Novick, Vice Chair and Co-Founder of BlackRock. The Director of the Division of Corporation Finance, William H. Hinman, also participated in the Roundtable.

Standardization, Transparency and Forward-Looking Information

There was a general consensus among panelists that companies’ providing greater transparency and forward-looking information is crucial when there is a lot of economic uncertainty, such as presented by the COVID-19 pandemic.
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NYC Comptroller Stringer Reports Progress on Project to Boost Board/CEO Diversity

Last week, New York City Comptroller Stringer announced the progress of the Boardroom Accountability Project 3.0 (Project 3.0) that is designed to foster diversity in the leadership of the companies in which the New York City Retirement Systems (NYCRS) invests. As an actively-engaged investor with sizeable assets under management (NYCRS reports that it had approximately $211.2 billion as of February 2020), NYC Comptroller Stringer notes that prior project campaigns have helped to facilitate the prevalence of important corporate governance matters, such as proxy access and greater board diversity transparency.

As described more fully in our prior post, Project 3.0’s objective is to increase the accessibility of director and CEO positions for women and persons of color by encouraging companies to adopt a “Rooney Rule” policy, resembling the one employed by the National Football League.
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NYC Comptroller Stringer Suggests “Rooney Rule” to Boost More Women and People of Color in Corporate Leadership

The New York City Retirement Systems (NYCRS) continues its effort to foster diversity in the leadership of the companies in which it invests. NYCRS is a collection of pension funds that together have over $200 billion in assets under management, and Comptroller Stringer serves as the investment advisor and custodian/trustee.

Boardroom Accountability Project 3.0

Last week, Comptroller Stringer announced the launch of the latest phase of the NYCRS’ shareholder engagement initiative, Boardroom Accountability Project 3.0.  With each phase, the NYCRS designates one or more themes on which to engage with its portfolio companies.  Project 3.0’s theme is increasing the accessibility of director and CEO positions for women and persons of color by encouraging companies to adopt a “Rooney Rule” policy, resembling the one employed by the National Football League. 
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