Citigroup, Wells Fargo, Bank of America, Goldman Sachs urge shareholders to vote against racial-equity audits

The shareholder proposals urge the banks to examine their practices and policies and identify ways to “avoid adverse impacts on nonwhite stakeholders and communities of color,” something the banks says is unnecessary because they are juggling different, related initiatives and/or have committed money to such issues internally and externally. The proposals are included in proxy statements to shareholders, which allow for the companies to support or oppose shareholder resolutions and explain why ahead of a vote at their annual meetings.

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CtW Investment Group wrote in its proposal to Citi shareholders that the bank “has a conflicted history when it comes to addressing racial injustice within the communities it serves.” The group provides examples, including Citi getting fined by the Treasury Department in 2019 for failing to offer all customers mortgage discounts and credits; its required minimum maintenance fees and minimum daily balances; and the fact that it has only one Black executive in the C-suite (Chief Financial Officer Mark Mason).

“While we disagree with the overall approach in this proposal, we are completely aligned with its stated goal of addressing racial inequity in the financial sector,” Citi said in its proxy filed Wednesday.

The bank pointed to its $1 billion commitment to providing greater access to banking and mortgages for communities of color, plus making investments in Black businesses. It also said, “As recently as September 2020, Citi released a 104-page report on the economic cost of Black inequality in the United States titled ‘Closing the Racial Inequality Gaps,’” and said its efforts on these issues are available to the public.

Citi is also recommending shareholders vote no on a couple of other racial equity-related resolutions, such as adopting a “Rooney Rule” policy to increase diversity in its board of directors and disclosing its direct and indirect lobbying activities in a report.

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CtW also mentioned minimum requirements for deposits and fees in its Bank of America resolution, adding that the Treasury Department found in 2018 that the bank offered proportionately fewer home loans to minorities than white applicants in Philadelphia, and that BofA’s C-suite is just 8% Black.

Bank of America said in its proxy released last week that it has committed $1 billion to supporting minority-owned businesses, jobs initiatives in Black and Hispanic communities, affordable housing and donations to historically Black colleges and universities and more. It also touted its work with “consumer advocates in the design and marketing of our financial services and products” and its efforts to diversify its workplace and leadership.

In its proposal at Wells Fargo, the Service Employees International Union Pension Plans Master Trust mentions the bank’s record of discriminatory lending practices that have led to different lawsuits and a settlement with the Department of Justice in 2012, as well as settlements of employment-discrimination claims.

Wells Fargo, which released its proxy Tuesday, said it is conducting a “human rights impact assessment,” and that it will release a summary of those results and the actions it plans to take in response. The company also said it is making efforts toward diversity, equity and inclusion in its workplace and among its top ranks.

The SEIU put forth a similar proposal at Goldman Sachs. It said that despite Goldman’s stated commitment to a diverse workforce, a Black managing director’s internal email calling for the company to do better went viral last year. In addition, the proposal mentions that the investment banking company “underwrites municipal bonds whose proceeds pay police brutality settlements. For example, Goldman was lead underwriter for a 2017 Chicago offering that allocated $225 million for settlements and judgments.”

In its proxy released Friday, Goldman Sachs recommended that shareholders vote against the resolution, saying it has taken additional steps toward racial equity in the past year, including “assessing [its] shortcomings” and committing to hiring more analysts from HBCUs.

It also pointed to its $10 million pledge to give to racial-justice organizations last year, plus hundreds of millions of dollars it has committed to grants and investments in minority businesses over the years.

Dieter Waizenegger, executive director of CtW, worked with the SEIU on the shareholder proposals. While he said he “welcomed” the banks’ pledges on racial equality and justice issues, “as investors, we believe a critical part of this work is an independent assessment of the effectiveness of these promises.” 

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The shareholder groups also had pointed out that the banks’ political and charitable donations have contradicted their stated commitments to justice and equity.

Wells Fargo “has donated to Senator Tom Cotton, who called for military air strikes on Black Lives Matter protests, as well as other members of Congress with racist records,” the SEIU shareholder resolution says.

CtW said “Citi donated $242,000 during the 2020 election cycle to 74 members of Congress who are rated ‘F’ by the NAACP,” and that Bank of America has been involved in issuing “judgment obligation bonds, a portion of which was used to pay for police related settlements” in Los Angeles.

Wells Fargo, Bank of America and Goldman have donated to police departments that “bypass normal procurement processes to buy equipment for police departments, including surveillance technology that has been used to target communities of color and nonviolent protestors,” the shareholder resolutions say.

Morgan Stanley MS, +1.40%, which had also been facing a resolution for a racial-equity audit, came to an agreement recently with CtW, which withdrew the proposal. Morgan Stanley has committed to an internal review of its workforce and leadership, according to CtW, which also said the bank has agreed to talk about what it will do to ensure equity for other non-white stakeholders before next year’s shareholder meeting.

JP Morgan Chase & Co. JPM, -0.70% is facing a similar shareholder proposal but has yet to release its proxy. This article will be updated when it does.

This article has been updated with additional information.