High-risk, high-profile issues approaching

As large, mainstream asset managers continue to take increasingly vocal positions on environmental and social issues, two high-profile topics appear likely to appear on more and more company boards’ agendas: sexual harassment and guns.

Sexism blind spot

The #MeToo movement has ignited news coverage and debate over sexual harassment and assault around the world. In the U.S., powerful men are facing accusations and careers are being ended from Hollywood to Capitol Hill to Wall Street. Company reputations and brand values are being threatened, quickly followed by questions focusing on the risk management oversight (or lack of) by their boards.

A survey last year by TheBoardlist and Qualtrics points to widespread vulnerability: 77% of board directors have not discussed accusations of sexually inappropriate behavior and/or sexism in the workplace; where the issue did reach the boardroom, only 12% had taken action to address it.

Guns under fire

Meanwhile, another horrific mass shooting in a Florida school in February has resulted in a dramatic nationwide mobilization led by students for action to restrict access to firearms. A number of companies and investors also have taken steps to address the issue, including Walmart and Dicks Sporting Goods, which announced new restrictions on gun sales. Several companies also cut their ties to the National Rifle Association or ended discount programs for its members.

Investors like State Street and Black Rock are promising to engage with weapons manufacturers and distributors while new firearms-related shareholder proposals are taking shape. While past proxy proposals have failed to garner significant support, partly due to the absence of socially responsible investors from gun companies’ share ownership profiles, the pressure is building on both manufacturers and retailers.

Building pressure

Investors will be keeping a close eye this proxy season on companies engaged in the manufacture and distribution of firearms and pressures from the market or investors to change how the companies do business. On sexual harassment, boards need to play their role in demanding a strong culture that promotes an inclusive and safe atmosphere where all employees feel valued. More women on boards would help: 85% of women responding to a recent survey say gender and racial diversity has improved the board’s approach to strategy and risk oversight, compared to 51% of men.

The bottom line: companies and investors would do well to be anticipating and focusing now on two volatile issues that show no signs of going away.

By |2018-07-25T14:21:34+00:00April 5th, 2018|Categories: Articles|Tags: , |0 Comments