Goldman Shareholders Urged by ISS to Vote Against Racial Audit

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One of the world’s biggest proxy-advisory firms, Institutional Shareholder Services, recommended investors vote against proposals filed with Goldman Sachs Group Inc. and other companies calling for them to undergo independent racial audits.

ISS said in a report Thursday that Goldman Sachs is taking “meaningful actions” to address racial and economic inequalities, and has initiatives focused on creating opportunities for people and communities of color.

The proxy-advisory firm has in the past month also advised shareholders to align with management by voting against racial-audit resolutions filed with Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. By contrast, ISS’s rival, Glass, Lewis & Co., has been recommending investors vote in favor of audits at Goldman Sachs, Citigroup and Bank of America.

Racial audits are a new request from shareholders that have emerged since corporate executives have made statements supporting racial justice in the wake of the widespread Black Lives Matter protests. The independent audits involve analyzing companies’ business models -- from their products and services to their political influence -- to determine whether they cause, reinforce or perpetuate racial discrimination.

BlackRock Inc. broke ranks with its finance peers this month by agreeing to undergo one.

The Service Employees International Union filed the resolution with Goldman Sachs, saying the New York-based investment bank underwrites municipal bonds, where part of the proceeds are used to pay police brutality claims. It cited Goldman Sachs’s role as lead underwriter for a 2017 Chicago offering that allocated $225 million for settlements and judgments.

Officials at Goldman Sachs declined to comment beyond what’s in its proxy statement, which singles out racial equity more than 25 times.

ISS said Goldman Sachs has invested money in communities of color, provides training to students and entrepreneurs, and supports organizations addressing structural inequities. The company also discloses diversity and inclusion initiatives, which includes setting hiring goals for analysts and entry-level associates, ISS said. Goldman Sachs also is showing signs of improvement for people of color in more senior-management roles, the proxy-advisory firm added.

“As such, based on its various disclosures, it appears that the company is undertaking meaningful actions to address the issue of racial and economic inequality,” ISS said.

ISS also has recommended shareholders vote against a racial-audit proposal filed with Johnson & Johnson. Glass Lewis advised investors to vote in favor.

JPMorgan Chase & Co., State Street Corp. and Amazon.com Inc. have asked their investors to vote against resolutions asking for them to undergo racial audits. Amazon pledged Wednesday to boost the number of women and Black employees in its senior ranks as part of an unusually detailed set of diversity commitments for a company that has rarely publicly discussed the makeup of its workforce.

Airbnb Inc., Starbucks Corp. and Facebook Inc. are among the companies that have undergone independent racial audits in recent years.

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