How the firm behind the Fearless Girl statue quietly opposed gender equality
Molly Redden in New York
Friday 6 October 2017 23.10 BST
In March, State Street Global Advisors unveiled Fearless Girl, a statue of a young girl confronting the charging Wall Street bull. It became an instant cultural touchstone.
But as selfies with Fearless Girl shot across social media, State Street, one of America’s leading money managers, was quietly and consistently voting down gender equality proposals at some of the country’s largest corporations.
On a shareholder proposal calling for Alphabet, Google’s parent company, to disclose any pay disparities between men and women, State Street voted no. On the same proposal before Wells Fargo, State Street voted no.
According to SEC records seen by the Guardian, in 2017 alone State Street rejected shareholder proposals to tackle gender inequality at least a dozen times – including at Aetna, American Express, Bank of America, Express Scripts, JP Morgan Chase and MasterCard.
The news comes as the money manager, which has $2.6tn in assets under management, has agreed to pay $5m to settle claims that it underpaid hundreds of its female employees.
State Street was also casting its votes at the same time it was trumpeting its efforts to help diversify the male-dominated world of corporate governance. The firm says it has voted against reinstating hundreds of board chairs at firms where the board is entirely men.
But while State Street may be pressuring companies to diversify at the top, it isn’t wielding its influence to promote gender equality for the workforce.
“You would have thought they would, if you’re going to so publicly announce ‘this is our position,’” said Peter Henning, a professor of law at Wayne State University. “But no one’s watching.”
Fearless Girl was an instant, viral success. Within a few weeks of her debut on International Women’s Day, she had starred in nearly a quarter-million Instagram posts. The promotion would go on to generate an estimated $7.4m in free marketing for State Street.
Some of State Street’s no votes on gender equality measures involved its She Fund – a multimillion dollar index fund created to advance gender diversity in business leadership. A share of its revenues go towards charities that “empower girls to become future business leaders”, State Street says.
Fearless Girl started life as a She Fund advertisement. When the statue was installed, a plaque at her feet read: “Know the power of women in leadership. She makes a difference.”
State Street voted She Fund’s shares against gender pay gap proposals for American Express, Mastercard, and Aetna, according to a document State Street prepared for the SEC. As with the other proposals, these called for the companies to produce a report about whether men and women in their workforces are paid equally.
Major institutional investors like State Street rarely support shareholder resolutions they see as dealing with “social issues”, such as gender and racial equality and climate change. The proposals typically originate with small investors and rarely pass.
But shareholder resolutions have become a powerful way to compel companies to reveal more about gender equality among their employees. Arjuna Capital, which introduced many of the gender pay gap resolutions on which State Street voted no, has used the prospect of similar proposals to get companies like Nike and Starbucks to disclose and close their gender pay gaps.
Men who don’t like women taking up space are exactly why we need the Fearless Girl. twitter.com/Newsweek/statu…
Just because these proposals rarely pass, said Ric Marshall, who specializes in corporate governance research, doesn’t mean State Street’s vote doesn’t matter.
“Their job is to vote on the issues that are on the agenda,” said Marshall, an executive director at MSCI ESG Research. “They cast a vote, they have to stand by it, one way or the other.”
Occasionally, a gender equality measure nearly passes. That was the case with a 2016 proposal for eBay to disclose its goals and methods for reducing the gender pay gap. A major investor advisory group encouraged a yes vote, saying: “eBay lags its peers in addressing gender pay disparity at its company.” Investors voted “yes” in extraordinary numbers.
Occasionally, a gender equality measure nearly passes. That was the case with a 2016 proposal for eBay to disclose its goals and methods for reducing the gender pay gap. A major investor advisory group encouraged a yes vote, saying: “eBay lags its peers in addressing gender pay disparity at its company.” Investors voted “yes” in extraordinary numbers.
But not State Street. Ebay urged investors to oppose the measure. State Street did so.
Using data from the firm Fund Votes, Bloomberg found that State Street supported gender proposals in just two instances in 2017 – pay gap proposals before Facebook and Alphabet. It voted against gender pay gap proposals before both companies on other occasions.
State Street did not immediately respond to a request for comment.
In its voluminous guidelines for proxy voting, State Street addresses “environmental and social issues”.
Although the section is comparatively short, it reads, in part: “We consider the financial and economic implications of environmental and social issues first and foremost. Environmental and social factors not only can have an impact on the reputation of companies; they may also represent significant operational risks and costs to business…
“In their public reporting, we expect companies to disclose information on relevant management tools and material environmental and social performance metrics.”
In an email to Bloomberg News, Rakhi Kumar, head of asset stewardship at State Street, said: “We are taking into account how the organization is holistically approaching diversity based on a number of factors that go well beyond just gender or pay.”
Some proposals, he said, were “too limited in scope, which can in turn limit their effectiveness”.
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