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NEW YORK – Tuesday the Service Employees International Union (SEIU) celebrated the recommendations of the Institutional Shareholder Service (ISS) and Glass Lewis, firms providing proxy advisory services, that shareholders of Wells Fargo vote in favor of the racial equity audit proposal filed by the SEIU Pension Plans Master Trust. The nation’s third-largest bank has a documented history of serious race discrimination issues that have sullied its brand with consumers and run afoul of regulators over the past decade.
Now major proxy advisory services feel that it is time to reconcile its balance sheet when it comes to race equity issues across its operations, including how it treats its own workers.
In a recommendation brief, Glass Lewis explained their rationale: “Especially in light of the events of 2020, companies must ensure that they are meaningfully addressing issues of racial injustice in their communities and workforces. A failure to do so could result in significant reputational risks… which have the potential to harm shareholders’ interests.”
The recommendation to investors comes on the heels of the coalition’s joint 2022 Proxy Voting Guide for Racial Justice, urging asset owners and managers to hold corporate boards accountable for responsible practices and risks related to systemic racism. The coalition is urging investors to hold boards accountable in four key areas: racial equity auditing, lobbying and political spending, director accountability, and disclosure and oversight of specific risks related to racial equity and justice.
“Working people who have built nest eggs for the future want to know that their retirement savings are not being used to advance or support racial injustice,” said Renaye Manley, deputy director of strategic initiatives at SEIU. “Wells Fargo has a long history of discriminatory lending and employment practices. A racial equity audit will provide insight into how they can change their practices and policies to reduce the risk racial inequity poses to worker’s investors.”
In 2012, Wells Fargo agreed to pay $175 million to resolve allegations stemming from a Justice Department investigation that found 34,000 cases in which the bank charged Black and Hispanic borrowers higher fees and rates on mortgages compared with white borrowers with similar credit profiles. Now Ben Crump, renowned civil rights lawyer in the Trayvon Martin and George Floyd murder cases, is joining a lawsuit against Wells Fargo alleging discriminatory lending practices..
“Interfaith Center on Corporate Responsibility (ICCR) members have been raising concerns about egregious ethical and cultural lapses at Wells Fargo since 2001; including the filing of shareholder proposals citing predatory and discriminatory lending practices, the marketing of credit cards to subprime consumers, and the fraudulent opening of credit card accounts for millions of its customers – all issues that disproportionately impact communities of color,” said Nadira Narine, senior program director of strategic initiatives at ICCR. “Investors view a third-party racial equity audit driven by stakeholder input as a much-needed first step for Wells Fargo to begin to redress its discriminatory history and to ensure that it prioritizes and remedies its impact on nonwhite stakeholders and communities of color.”
In their recommendation brief, ISS noted “the company has faced scrutiny over racial equity issues concerning its business and hiring practices. An objective, third party audit assessing the civil rights impacts of the company’s policies and practices could help address recent related controversies. It would help shareholders better assess the effectiveness of Wells Fargo’s efforts to address the issue of racial inequality for its stakeholders and its management of related risks.”
Voting on the racial equity audit proposal is underway. The results will be announced at the upcoming Wells Fargo 2022 Annual Meeting of Shareholders on Tuesday, April 26. Service Employees International Union (SEIU) is an organization of 2-million members united by the belief in the dignity and worth of workers and the services they provide, and dedicated to improving the lives of workers and their families and creating a more just and humane society. www.seiu.org’