This summer, John Deere sent shockwaves through the ESG world by axing it’s DEI programs due to a public pressure campaign waged on social media. However, in responding to one stakeholder, others felt jilted, including activist fund “As You Sow”- who filed a shareholder proposal seeking more information on DEI at Deere. Governance Intelligence explains As You Sow’s proposal in a recent article:
“As You Sow writes that in July of this year Deere ‘announced an ambiguous and inconsistent shift in policies and practices regarding its workplace diversity strategy. If the company has dismantled key [DE&I] policies and practices, this exposes it to financial, competitive, legal and reputational risks.’”
Deere responded to the shareholder proposal by filing a “no-action” request with the SEC (for the uninitiated, read about how proxies work in our blog series – Part 1, 2, 3 and 4). According to Deere, the proposal is duplicative because it requests information similar to a blocking proposal filed by the National Legal and Policy Center, a known anti-ESG activist group, requesting:
“A report on statistical differences in hiring across race and gender globally and/or by country, where appropriate, including associated policy, reputational, competitive, operational risks and risks related to recruiting and retaining talent.”
If either proposal is approved, Deere may have to produce a substantial amount of detailed DEI data, a task that would be made easier by having a DEI department. We haven’t seen the actual proposal so we don’t know if it is structured to make it binding (not common) or simply a typical precatory request (read a bit on that from Meredith at TheCorporateCounsel.net). The big takeaway here boils down to Newton’s third law of motion: for every action there is an equal and opposite reaction. Companies appeasing the anti-ESG crowd will face backlash from pro-ESG stakeholders and vice versa. So how do you work your way out of the Catch-22? Make the best choice for business. Making everyone happy is an unattainable goal, but managing your ESG risks and opportunities can result in real returns that rise above the noise.
Our members can learn more about shareholder activism here.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
Photo credit: wolterke – stock.adobe.com
