Culturupt Alert – Microsoft Shareholder Proposal Sexual Harassment Report/ESG

Microsoft Shareholders Approved a Proposal Requesting that Microsoft Publish A Sexual Harassment Report Which Further Highlights the Increasing Scrutiny on Workplace Investigations as a Critical ESG Factor. What Should Companies Be Doing Now To Prepare?

This week Microsoft shareholders approved a proposal asking the Microsoft board to publish a report on the effectiveness of its workplace sexual harassment policies. The effort was led by activist shareholders at Arjuna Capital, which regularly files shareholder proposals. It was no surprise to outsiders that an effort like this may be forthcoming given Microsoft’s recent woes after allegations that Microsoft co-founder Bill Gates engaged in inappropriate relationships with subordinates at the company while he was CEO surfaced in 2020, as well as the company wide email thread in 2019 detailing current employees’ experiences with workplace sexual harassment.

Natasha Lamb from Arjuna Capital specifically spoke out at the Microsoft Board meeting this week noting that the proposal was filed because Microsoft had failed to address two key requests in the shareholder proposal: independent investigations and public reporting on the executive level probe into Gates. Lamb added that “Independent investigations are the only way to ensure investors that subjectivity is removed when conducting investigation. . . The risk of inaction is considerable. . . For Microsoft to avoid these risks, we believe it needs to protect its employees from harassment by committing to independent investigations and transparent reporting.”

By concretely linking independent investigations to risk, Arjuna Capital and the shareholders of Microsoft effectively demonstrated that corporations must consider their choice of investigator, and reporting on complaints as another ESG factor, alongside other factors like climate change and racial injustice.

So what should companies be thinking about now?

  1. Sexual Harassment Training – It’s probably time to think twice about using the same software you’ve used for the last five years to conduct sexual harassment training. Consider in-person or virtual Zoom trainings that require your employees to participate fully in the process and ask questions alongside scenarios.

  2. Evaluate who should conduct the Investigation– Is the investigation being conducted by a true independent party? Are you best served by having a third-party outside investigator versus an internal investigator or an attorney from a company associated law firm to evaluate the concerns at hand? It is likely in the future you will have to report out on the investigator you chose, and why? Will the report, if any, be released? 

  3. Reporting– Microsoft already reported on the number of complaints it received in the first two quarters of 2021 and the percentage of complaints that were substantiated. But, for true transparency, companies should report on what happens next. Was feedback delivered? Who was it delivered by, and how was this feedback recorded/preserved? An investigation is only one measure of whether things are changing, accountability and outcomes are the other measures we should be tracking as well for ESG purposes.

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