The U.S. Equal Employment Opportunity Commission (EEOC) requires that all companies with 100 or more employees confidentially submit a report, known as the EEO-1, which shows a company’s demographic workforce data by sex, race and ethnicity. For years, shareholder advocates including the NYC Comptroller’s office, Boston Trust Walden and others asked companies to release this data. In the summer of 2020, as investors and corporate leaders began to understand the extent to which discrimination pervades our economy, corporate disclosure of EEO-1 forms increased. From August 2020 to October 2022, the number of S&P 100 companies releasing EEO-1 data quadrupled.

As the release of these forms became more standard in companies’ diversity reporting, the conversation shifted from asking to have the data released to seeing what the data could show.

A report released by As You Sow and Whistle Stop Capital in November 2022 assessed the data from 277 EEO-1 reports, looking at the link between workforce diversity and corporate financial performance. In line with our hypothesis and others’ previous research, the analysis found that financial metrics, like return on equity and net profit, were associated with higher levels of diversity in management. Positive financial performance was also associated with a smaller gap between diverse representation in management and overall workforce diversity, indicating a benefit exists for those companies with strong internal promotion pipelines.

A significant and surprising finding relates to brokers’ projections of companies’ expected future growth. Brokers are expected to be objective and data driven. However, it appears brokers are more likely to have lower future growth expectations for companies with higher percentages of BIPOC managers. These lowered future expectations are misaligned with the positive past financial performance of companies with diverse management.

As You Sow also hosts a public database that tracks Russell 1000 companies on their disclosure of their hiring, promotion and retention rates of employees by gender, race and ethnicity. These rates, known as inclusion factors, along with the EEO-1 report, allow investors to have a clear view of how the company manages its workforce and can highlight underlying management issues.

Disclosure of inclusion factors is quickly increasing. Whistle Stop supports its clients in engaging companies on the release of this dataset. Within our conversations alone, over 30 companies have agreed to release at least two of the three inclusion factors within the next two years. It’s very concerning when a company will not commit to future disclosure as it may indicate that the company does not track its hiring, retention or promotion rates or that it believes that sharing the data might negatively impact investors' perceptions of its stock.

Access to inclusion data will have significant benefits. As more data are available, human resources managers and diversity officers also will be able to identify those programs that work and to differentiate best intentions from best practices.

While much has improved, we are still at the beginning of this work. Investors must continue to encourage and support companies in their release of these essential data sets.

Meredith Benton
Principal and Founder, Whistle Stop Capital

Jaylen Spann
Lead Research Associate, Whistle Stop Capital