New York City Comptroller Scott M. Stringer, on behalf of the New York City Pension Funds, sent letters this week to twenty of the Funds’largest holdings, including Apple, Pfizer, Oracle, and American Express, asking them to disclose performance figures on their supplier diversity programs. Ninety percent of S&P 100 companies have supplier diversity programs but less than half of that group discloses data on program performance. Supplier diversity is generally defined as programs that seek to purchase competitively priced goods and services from businesses owned by minorities, women, veterans and disabled individuals, among others.
“Supplier diversity is the next frontier for companies seeking to manage risk and create sustainable shareowner value,” Comptroller Stringer said. “A broader pool of diverse suppliers provides tangible benefits to corporations in terms of price and quality, but also enhances brand value, reputation and goodwill. These 20 companies talk the talk but, absent disclosure, it’s impossible to measure the impact of their efforts.”
The letter requests that companies disclose qualitative and quantitative performance data that sheds light on program effectiveness either on the company web site or in a sustainability report by September 30, 2014, for disclosure of 2013 data, with annual reporting thereafter. Specifically, companies were asked to:
- Disclose their annual spend with diverse suppliers in both real terms and as a percentage of their total supplier spend, preferably by category;
- Establish and disclose quantitative performance goals for their supplier diversity program and annual progress toward achieving these goals; and
- Describe the ways in which supplier diversity goals are reinforced throughout the organization, including for example, through (a) oversight by senior management and the board of directors and (b) specific compensation incentives for employees, managers and senior executives
“We want companies to go beyond simply reporting dollars and cents spent on supplier diversity programs. We’re asking them to describe how the programs fit into their overall approach to diversity and to their business strategy more broadly. Some of the most successful companies in the world provide this information, now we are asking these corporations to follow suit,” Comptroller Stringer said.
The need for quantitative disclosure has become more urgent in light of the Dodd-Frank Act, which requires six federal regulators, including the Securities and Exchange Commission, to assess the diversity policies and practices of regulated entities. In a February comment letter on proposed standards, Comptroller Stringer urged the SEC to encourage corporate disclosure of spending dedicated to diverse suppliers, both on an absolute basis and as a percentage of total spending.
The 20 companies that received letters this week represent less than 1 percent of the nearly 3,500 domestic public companies in the Funds’portfolios, but the combined investment in these 20 companies is valued at roughly $5.8 billion, more than 9 percent of the Funds’ total investment in domestic public equity.
The companies which received the letter, along with approximate share values as of mid-March are:
- Apple Inc. 2.2 million shares valued at approximately $1.2 billion
1.5 million shares value at approximately $147.7 million
16.2 million shares valued at approximately $519.6 million
- Oracle Corporation 8.7 million shares valued at approximately $338.3 million
- Qualcomm 4.5 million shares valued at approximately $347.2 million
- Cisco Systems, Inc. 13.4 million shares valued at approximately $290.1 million
- Home Depot, Inc. 3.6 million shares valued at approximately $286.7 million
- United Technologies Corp. 2.3 million shares valued at approximately $262 million
1.8 million shares valued at approximately $235.5 million
- Boeing Company 1.8 million shares valued at approximately $223 million
- American Express Company 2.2 million shares valued at approximately $199 million
- MasterCard, Inc. 2.8 million shares valued at approximately $223 million
- Bristol-Myers Squibb 3.8 million shares valued at approximately $210.7 million
1.7 million shares valued at approximately $224.4 million
- Conoco Phillips 3.1 million shares valued at approximately $208.6 million
- United Health Group 2.6 million shares valued at approximately $199.5 million
- Honeywell International 1.8 million shares valued at approximately $173.5 million
4.2 million shares valued at approximately $178.4 million
4.6 million shares valued at approximately $167.2 million
1.8 million shares valued at approximately $145.1 million
Comptroller Stringer serves as the investment advisor to, and custodian and a trustee of, the New York City Pension Funds. The New York City Pension Funds are composed of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund and the Board of Education Retirement System.