Diversity, equity, and inclusion have become hot button issues to which each company must respond transparently and completely. Progress begins with voluntary disclosure of EEO-1 reports.
Calls to diversify the workplace have never been louder or clearer. The business case for diversity has been studied, yet bias and discrimination remain pervasive. In the wake of racial and gender injustices being brought forward to public scrutiny, many corporations have been speaking out and taking action. Some companies have pledged billions of dollars to support racial equity. Others have added a Chief of Diversity position and other inclusion-related roles.
While it’s great to see companies directing resources toward diversity initiatives, how can stakeholders measure achievements being made within a company and identify areas that require improvement? According to an investor group representing $4.6 trillion in assets, disclosure of quantifiable and comparable diversity, equity, and inclusion (DEI) data is essential. This may sound like a heavy lift, but a significant number of companies in the U.S. already report this data. Since 1966, the U.S. Equal Employment Opportunity Commission has required private employers with more than 100 employees to report employee data by job category, ethnicity, race, and gender. This annual data collection, known as the EEO-1 report, is privately reported. It’s up to the company to voluntarily disclose this information.
Of course, releasing a EEO-1 report will not, by itself, make a company’s workforce more diverse. It is, however, a crucial first step. The EEO-1 report is a consistent, measurable, and standardized tool that companies can use to disclose workplace equity data. For most companies that already complete the form, it comes at little or no incremental cost. It provides a baseline that allows stakeholders to measure and compare outcomes from a company’s diversity practices and policies. Public disclosure of an EEO-1 report signals that a company is willing to acknowledge its starting point, disclose progress toward stated commitments, and account to its stakeholders for diversity data.
Soon, public disclosure may no longer be a matter of choice. In the most recent proxy season, shareholders at IBM, Union Pacific, and DuPont de Nemours voted in favor of proposals asking the companies to release EEO-1 and other detailed diversity reports. In July 2020, the New York Comptroller, along with three NYC Retirement Systems, called out 67 large public companies by demanding that they match their diversity support statements by publicly disclosing their EEO-1 reports. Bloomberg recently began surveying S&P 100 companies on their DEI initiatives, an initiative which includes asking companies to disclose their EEO-1. In the first survey conducted in June 2020, only 25 companies agreed to disclose their reports. That number increased to 76 in the most recent survey. Bloomberg even turned the survey results into an interactive database that compares a company’s demographics to benchmarks gathered from the U.S. Census.
Example of Starbucks’ 2018 EEO-1 report.
Companies that refuse to release EEO-1 reports are increasingly being called out and isolated. But the refusal is not new. Consider Home Depot, for example. Investors first filed a resolution asking the company to disclose its EEO-1 report in 1997. The company had just settled a class action sex-discrimination lawsuit, and investors thought the EEO-1 report could help measure the improvement of Home Depot’s hiring and promotion of women. This proposal has been brought forth at each annual shareholder meeting since, and the company finally agreed to release the report this year. The ask was the same every year. The social context now, however, is much different, and pressure for compliance has grown.
To attract ESG capital and be recognized as sustainability leaders, companies should publicly disclose DEI data voluntarily, not under duress. Although imperfect, these data provide stakeholders with a benchmark for measuring diversity performance. Combined with other best practices, such as disclosing rates of recruitment, promotion, and retention of a diverse workforce, the commitment to disclose EEO-1 reports demonstrates a sustained commitment to diversity.
Is your company wrestling with issues of ESG disclosure and measurement? The Global Imprint wants to help you find ways to optimize your ESG reports and results. Let us help. Take the next step, and book 15 minutes with a client advisor here. https://calendly.com/jessica_carpenter