A clash between Wells Fargo and a prominent investor over racial equity at the banking giant highlights the mounting pressure on some of America’s biggest companies to follow through on their pledges to improve their diversity practices.
Wells Fargo is urging shareholders on Tuesday to vote against a proposal calling on the lender to improve its racial diversity policies for employees as well as assess the company’s impact on communities of color. According to a regulatory filing, the Service Employees Union pension plan proposal calls for the bank to conduct an internal review to help “identify, prioritize, remedy and avoid adverse impacts on nonwhite stakeholders and communities of color.” The findings would then be publicly disclosed on the company’s website.
Wells Fargo’s board of directors has said that a “human rights impact assessment” is already in the works.
“Wells Fargo is committed to doing the work to ensure we provide our employees with an inclusive and respectful workplace where diverse talent flourishes,” a spokesperson for the lender said in an email to CBS MoneyWatch. “While we have more work to do, we have taken steps that include creating a diverse segments, representation and inclusion group reporting directly to the CEO that is accountable for progress and execution of new and existing programs; conducting diversity-focused talent reviews and sponsorship programs to help promote underrepresented groups; assessing senior leaders on increasing diverse representation at leadership levels; and requiring unconscious bias training for all managers.”
Wells Fargo intends to publish 2019 and 2020 employee data on gender and race this summer, the spokesperson added.
Despite those steps, some Wells Fargo employees think Wells Fargo isn’t doing enough to promote diversity.
“As bank workers and Wells Fargo shareholders, we don’t want empty promises,” Ted Laurel, an HSBC account resolution specialist in San Antonio, Texas, who is Mexican-American, said in a news conference last week organized by the Committee for Better Banks (CBB), a coalition of bank workers, consumer and labor groups.
In the same position for eight years, the 38-year-old Army Reserves veteran and father of eight recounted applying for 15 promotions without success. Laurel said in the media briefing that other people of color in his department faced similar obstacles to moving up at Wells.
“My heart was broken,” Laurel said of learning that CEO Charles Scharf had blamed the company’s dearth of Black executives on the banking giant having a “very limited pool of Black talent to recruit from”. While Scharf apologized for his words and held a conference call with employees in December to address their concerns, no concrete changes have ensued, Laurel said.
“We can’t succeed if those of us of color aren’t given an opportunity,” said Laurel, voicing support for the SEIU’s proposed diversity audit.
Laurel applied for nine positions and did not meet the minimum requirements for the jobs, which typically draw about 200 applicants, according to Wells Fargo.
A Washington-based investment group has introduced a similar proposal at Bank of America, which, like Wells, opposes it on grounds that the company is already moving to address racial inequities. “Our actions and focus in making progress on the issue of racial equity, and reporting on our progress regularly, render the proposal’s requested audit unnecessary,” Bank of America’s board stated.
Bank of America’s figures show that employees of color in upper management roles rose to 39% in 2020 from 32% in 2015.
Not fast enough
Unlike Wells and BofA, BlackRock is agreeing to a racial audit. CEO Larry Fink told the Harvard Business Review in a recent interview that the world’s largest asset management firm is not “moving as fast as I wanted” on increasing diversity, according to Bloomberg.
A recent study by the Committee for Better Banks found that Black employees are the least likely to climb the corporate ladder at 13 of the country’s biggest consumer banks. A February report by McKinsey & Co. found it would take nearly a century for Black Americans working in the private sector to achieve parity in management. Black workers, who account for 15 million, or 12%, of the 125 million private-sector employees, and 20.6 million of the overall Black labor force, are underrepresented in the highest-growth geographies and the highest-paying industries, the consulting firm found.
Such disparities — along with the widespread protests following the murder of George Floyd last summer by a Minneapolis police officer — triggered more promises by big corporations to boost their own diversity and to support minority communities. Amazon, for example, vowed to double its count of Black directors and vice presidents as well as increase its hiring of Black employees this year by at least 30% compared with 2020.
But such pledges often end up delivering far less than they promise, according to labor experts.
“It’s a signal to consumers they are on the right side of this issue, while doing very little in practice,” Rebecca Konins Givan, an associate professor at the School of Management and Labor Relations at Rutgers University. “You can’t credibly be supportive of racial justice but opposed to your workers organizing,” she added of Amazon’s recent win against.
In announcing its workforce diversity targets for the year, Amazon released figures showing Black employees accounted for 3.8% of leadership roles at the company last year.
“Good intentions don’t work”
“We know that good intentions don’t work, but mechanisms do. That’s why we are using the same mechanisms that we use for our most important business initiatives to build a truly inclusive and equitable workplace: setting goals and using regular reviews to ensure our progress,” Beth Galetti, Amazon’s senior vice president of people experience and technology, wrote in a blog post earlier this month.
But Kimberly Houser, an assistant clinical professor of business and tech law at the University of North Texas, doesn’t see a clear strategy at Amazon for addressing its dearth of diversity.
“There has not been much change since Amazon began publishing diversity reports in 2014,” she said in an email to CBS MoneyWatch. “The statements regarding accountability just list vague goals. There are no consequences for failing to meet them.”
After Silicon Valley drew fire five years ago for its White male- , major tech companies, including Amazon, Apple and Google, immediately started publishing data on their workplace diversity. Initially regarded as evidence of a good-faith effort to hire more women and minorities, the annual reports illustrate that these public pledges often fall short, according to Houser.