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Starbucks, Google Assailed by Investors Over Gender Policies

Starbucks, Google Assailed by Shareholders Over Gender Policies

Starbucks, Google Assailed by Investors Over Gender Policies
An employee holds a utensil over a glass container of coffee at a Starbucks Corp. coffee shop (Source: Taylor Weidman/Bloomberg)

(Bloomberg) -- Investors focused on social issues are finding that trickle-down diversity doesn’t work. 

For years, they surmised that having enough women on boards and in senior management would produce fairer policies. Now investors are changing tactics, saying it’s not enough and that employers also need to implement gender-pay equity and paid-leave policies that attract and retain women.

Zevin Asset Management, in a first-of-its-kind shareholder proposal, is asking Starbucks Corp. Monday to prepare a report on its new paid-leave policy that took effect Oct. 1, saying the approach is “particularly unequal.” The coffee chain offers 18 weeks of paid leave for mothers in corporate headquarters and just six weeks for those who work in its stores, while also excluding fathers. Adoptive parents are eligible for six weeks of paid leave under a separate benefit.

“This is an employment discrimination situation waiting to happen,” Pat Tomaino, associate director of socially responsible investing at Boston-based Zevin, which holds more than 61,000 Starbucks shares valued at about $3.3 million, said in an interview. “We want to focus on companies that are managing human capital appropriately and attuned to investing in women’s career paths. Such a big divide between headquarters and the front-line workforce can erode morale.”

‘Competitive Approach’

Jaime Riley, a Starbucks spokeswoman, said the policy announced in January is “exceptional” for a retailer because it’s offered to employees who work a minimum of just 20 hours a week, without a tenure requirement.

“We take a competitive approach and evolve our benefits based on ongoing conversations with our partners as we learn more about their different benefits needs and preferences,” Riley said in an email. The company also offers 12 weeks of unpaid leave to all eligible part-time workers in its stores, including those with adopted and foster children, Starbucks said in a follow-up email on Monday. Adoptive parents are eligible for six weeks of paid leave under their benefit.

Zevin has approached more than a dozen major companies about their paid-family-leave policies -- they include Costco Wholesale Corp., United Parcel Service Inc., Amazon.com Inc. and Apple Inc. -- and plans to file more proposals in coming months. The pressure on firms to deliver is higher now, Tomaino said, noting a lack of action on paid-leave policy from the U.S. government.

See also: EEOC says Estée Lauder’s new parent policy discriminates

Another asset manager, Arjuna Capital, filed nine shareholder resolutions last year over gender-pay gaps at technology companies. Of those, Facebook Inc. and Google parent Alphabet Inc. “failed to take meaningful action,” Arjuna said in a statement last week. “Today, Alphabet is under fire for its lack of transparency on gender-pay equity, making it subject to federal, class action, and shareholder actions,” Arjuna managing partner Natasha Lamb wrote in a Sept. 26 letter to Alphabet Chairman Eric Schmidt.

Google reported earlier this year that women are paid 99.7% of what men make and has already provided the methodology it uses to determine equitable pay that Arjuna is asking for, a Google spokesman said. Last month, three women who worked at Google in recent years filed a class-action lawsuit in San Francisco Superior Court, accusing the company of systematically paying male employees more than their female counterparts. Google has said it disagrees with the lawsuit’s central allegations and that it has “extensive systems in place to ensure” fair pay.

Starbucks, Google Assailed by Investors Over Gender Policies

Corporate policies and practices on gender issues are “the next frontier” for investors, said Suzanne Biegel, a senior adviser at the Wharton Social Impact Initiative and founder of Catalyst at Large, a consulting firm that focuses on investing through a gender lens.

“Unfortunately, there isn’t necessarily a correlation between having women on the board and in the C-suite and having fair policies and practices,” Biegel said in an interview.

Investors, meanwhile, still remain focused on getting more women on boards and into senior management. State Street Corp., the $2.6 trillion asset manager, voted against director slates this year at about 400 companies that lacked female board representation. The firm’s SPDR Gender Diversity exchange-traded fund focuses on companies that have greater gender diversity in senior leadership. BlackRock Inc., the world’s biggest money manager, said it supported eight of nine shareholder proposals on board diversity this year and opposed board members at five companies that failed to address it.

‘Right Thing’

Shareholders are drilling down into the details. The top request from Aflac Inc. investors this year was for more information on gender pay equity policies, said Catherine Blades, a spokeswoman for the insurer. That prompted the company to include a detailed section in its corporate responsibility report for the first time about how it determines equitable pay for employees, she said.

These policies are also quickly becoming an issue that can affect customers’ willingness to open their wallet, according to Columbus, Georgia-based Aflac.

The insurer, in a June survey of 1,001 consumers and 100 investors, found consumers were less willing to forgive a company for not paying employees equitably than for polluting. Slightly more than half of consumers and 34 percent of investors said paying male and female employees the same amount for the same job was a top priority. Paid leave was a bigger issue for investors, with 59 percent saying they strongly agreed that responsible companies offer paid maternity leave policies, versus 51 percent of consumers.

“Investors and the public are moving fast,” Blades said. “People will go out of their way to penalize companies they don’t think are doing the right thing.”

To contact the reporter on this story: Emily Chasan in New York at echasan1@bloomberg.net.

To contact the editors responsible for this story: Alicia Ritcey at aritcey@bloomberg.net, Peter Eichenbaum, David Scheer