5 Charts on How Investors Are Addressing Race at Shareholder Meetings

Diversity, equity, and inclusion, or DEI, has never been far from the headlines so far this year, and not always for reasons that everyone would welcome. But Morningstar data shows that investors are still taking a keen interest in the risks and needed oversight associated with companies’ impacts on people, including where race and ethnicity comes into the picture.

In recent years, a wide swath of companies and investors have been paying closer attention to the negative impacts that racial inequities have on individuals and on society and have made commitments to improve their practices.

But, as important as that is, these efforts are not simply a case of here-today-gone-tomorrow acts of corporate social responsibility. Institutional investors’ corporate governance policies frequently emphasize that these inclusion efforts are an important part of how companies can deliver their strategies and secure competitive advantages. You’ll often see them refer to this as human capital management.

Reflecting that view, more than 200 shareholder resolutions over the last three proxy years have targeted how companies address race and ethnicity in their business, as shown on the chart above.

However, average shareholder support for these proposals is down by more than half over that period, from 36% in the 2022 proxy year to only 16% in 2024. (We’ve adjusted the figures to include only votes by shareholders independent of the companies being targeted.)

Have investors lost their appetite for dealing with the issue? It’s not quite that simple.

The chart below shows the 226 resolutions split by category. The conventional resolutions are split into three categories. Workforce-related resolutions address issues like racial pay gaps, antiharassment and discrimination measures, and workforce composition reporting. Community-related resolutions address a company’s impact outside the workplace—civil rights and racial equity audits, and requests for information about discrimination risks of advanced technology fall into this category. There are also resolutions requesting information about racial and ethnic diversity at board and senior management level.

However, anti-DEI resolutions fall outside of these conventional categories. Filed by conservative activists, these resolutions seek to push back against companies implementing measures to target greater racial diversity or tackle unfairness.

As we’ve seen with anti-ESG resolutions recently, the number of anti-DEI proposals addressing race has grown rapidly in the last three proxy years. The 29 votes in the 2024 proxy year exceeds the total from the previous two years put together. However, support for these resolutions is consistently very low, averaging 2% over the last three proxy years. Investors consistently and overwhelmingly reject anti-DEI proposals when they appear on the corporate proxy ballot, and it looks like that isn’t about to change.

If we strip out the anti-DEI resolutions that investors care little about, we see much higher average support overall, and a less steep decline in support over the last two years. Average independent shareholder support for the remaining 170 resolutions in the last three proxy years stands at 33%: 43% in 2022, 30% in 2023, and 24% in 2024.

This largely follows the pattern we saw with conventional ESG resolutions in general over the last couple of years: a slowdown in volume growth and declining support, with investors becoming less likely to support resolutions that make more specific asks of companies.

That said, there were pockets of relative success for some resolution proponents in 2024. Eighteen resolutions addressing race and ethnicity reached a significant level of independent support (that is, 30% or more). Requests for pay gap reports at Apple AAPL, Amazon AMZN, Nike NKE, and Oracle ORCL all found a significant degree of shareholder backing, as did a request for reporting on antiharassment and discrimination efforts at Tesla TSLA.

These results, addressing workforce matters, nicely illustrate the direction of travel for resolutions on race and ethnicity, as shown on the chart above. In 2022 and 2023, more than half the resolutions voted on this topic were about the board and management and the company’s impact on the community.

Investor attention has since turned inward to focus on workforce issues from a human capital management perspective. This is in keeping with wider market voting trends on sustainability matters. In the 2024 proxy year, 68% of these resolutions were of this type.

This shift might not be permanent, though. The new year and a new presidential administration has brought with it the broad pushback on all things DEI that conservative activists have been campaigning for. The resulting withdrawal of reporting and regulation may well prompt investors to start asking questions once more about risks associated with business impacts on people—on race and ethnicity, and a range of other topics.