State Street Global Advisors (SSGA) released its eagerly awaited 2021 proxy voting agenda earlier this week and, unsurprisingly, climate change risk and the lack of racial and ethnic diversity are among the investor’s top priorities. In the annual letter from the President and CEO Cyrus Taraporevala (CEO’s Letter), companies are urged to increase their transparency around racial and ethnic diversity. “The preponderance of evidence demonstrates clearly and unequivocally that racial and ethnic inequity is a systemic risk that threatens lives, companies, communities, and our economy — and is material to long-term sustainable returns,” Taraporevala reasons. He warns that SSGA is willing to hold large-cap public companies accountable for failing to make adequate progress accordingly.

More specifically, the CEO Letter dated January 11, 2021 states that SSGA’s 2021 proxy voting policies, which have not been fully published yet, provide that:

  • In 2021, the firm will vote against the nominating/governance committee chairs at S&P 500 companies that do not disclose the racial and ethnic composition of their boards;
  • In 2022, it will vote against the compensation committee chairs at S&P 500 companies that do not disclose their EEO-1 Reports, which include employment data categorized by race/ethnicity, gender and job category. While these reports are filed with the U.S. Equal Employment Opportunity Commission, the reports are generally not available to the public; and
  • In 2022, the asset manager will hold accountable the nominating/governance committee chairs at S&P 500 companies that have no board members from an underrepresented community. The letter does not define the term “underrepresented community” or otherwise indicate how this term’s definition compares to those in Nasdaq’s pending Board Diversity Proposal or under California’s law requiring diverse directors.

The letter advises companies to be prepared for “thorough engagements” on racial and ethnic diversity-related matters in the coming year. To aid companies, the firm has also issued further guidance on enhancing racial and ethnic diversity disclosures. This guidance builds on the August 2020 letter from Rick Lacaille, SSGA’s Global Chief Investment Officer by, among other things, communicating the proxy voting guidelines relating to racial and ethnic diversity and a brief overview of the firm’s engagements. SSGA continues to expect robust disclosure in 5 key areas: (i) strategy, (ii) goals, (iii) workforce and board metrics, (iv) board diversity and (v) board oversight.


Climate change continues to be of paramount interest to SSGA. The CEO’s Letter reminds companies that since 2018 the firm has requested that all of its investee companies use the Taskforce on Climate-related Financial Disclosures (TCFD) framework and has been engaging with companies on how they plan to transition their companies to a lower carbon environment.

In 2020, the investor joined Climate Action 100+, an investor-led initiative focusing on reducing greenhouse gas (GHG) emissions, largely by targeting some of the world’s largest GHG emitters. BlackRock also joined Climate Action 100+ in 2020.

Companies with Low R-Factor/ESG Scores 

The firm plans to engage with companies that scored in the bottom 10% of R- Factor scores. R-Factor, which we previously have discussed, is SSGA’s proprietary scoring system that leverages the Materiality Map developed by the Sustainability Accounting Standards Board (SASB) and uses ESG data providers that SSGA describes as “best-in-class.” In 2020, the investor started voting against what it deems to be low-scoring companies without adequate plans for improving their R-Factor scores.