Eli Lilly Loses SEC Challenge — Shareholder Resolution for Transparency in DEI Programs Moves Forward to a Vote
As You Sow proposal seeking metrics to effectively evaluate the impact of corporate diversity, equity, and inclusion programs prevails at SEC.
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Stefanie Spear, sspear@asyousow.org, 216-387-1609
BERKELEY, CALIFORNIA—MARCH 15, 2023—The U.S. Securities and Exchange Commission (SEC) Friday ruled against Eli Lilly’s attempt to exclude from its proxy statement an As You Sow shareholder resolution addressing diversity, equity, and inclusion (DEI). The resolution asks Eli Lilly to report to shareholders on the effectiveness of the company's DEI efforts by releasing quantitative metrics on its hiring, retention, and promotion of employees, including data by gender, race, and ethnicity.
Eli Lilly unsuccessfully sought to exclude the resolution on the basis of substantial implementation and that the proposal interfered with its ordinary business.
“There are many benefits to fostering a workforce that attracts and retains the best talent and is reflective of the diversity of our society,” said Meredith Benton, workplace equity program manager at As You Sow and founder of Whistle Stop Capital. “Our recent report analyzing 277 EEO-1 reports shows an association between companies having a more diverse workforce and outperformance on key financial metrics.”
Companies with the highest gender diversity are more likely to outperform and have superior value creation. The most diverse companies also tend to have a higher average stock return than the least diverse companies, with long-term trends pointing to higher levels of future profitability and return on equity. Finally, companies with high employee satisfaction, strongly related to a healthy and supportive work environment, have also been linked to annualized outperformance of more than 2%.
Women and employees of color often encounter barriers when being hired and promoted. Results of a meta-analysis of 24 field experiments found that, with identical resumes, white applicants received an average of 36% more callbacks than Black applicants and 24% more callbacks than Latino applicants. Many women also experience "a broken rung" in their careers; for every 100 men who are promoted, only 86 women are. Women of color are particularly impacted, comprising 17% of the entry-level workforce and only 4% of executives.
“As greater numbers of companies adopt DEI programs, shareholders seek information demonstrating the effectiveness of these human capital management programs,” said Andrew Behar, CEO of As You Sow. “Quantitative hiring, promotion, and retention rate data show how well a company is managing and developing its workforce. Investors know that greater workplace diversity leads to outperformance, this data is needed to help make the best investing decisions.”
There is a swell of support among other companies who see the value in greater disclosure and are committed to releasing at least two of the three requested data sets. These commitments include over 30 companies and include CVS Health, Gilead Sciences, Thermo Fisher Scientific, UnitedHealth Group, Activision Blizzard, eBay, General Dynamics, Hasbro, and McDonald’s.
Eli Lilly has not reported sufficient data to allow investors to determine the effectiveness of its human capital management programs. As You Sow recognizes the value to be gained from the release of this information and seeks to work with companies like Eli Lilly to strengthen their DEI commitments.
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As You Sow is the nation’s leading shareholder advocacy nonprofit, with a 30-year track record promoting environmental and social corporate responsibility and advancing values-aligned investing. Its issue areas include climate change, ocean plastics, pesticides, racial justice, workplace diversity, and executive compensation. Click here for As You Sow’s shareholder resolution tracker.