New York State’s retirement plan is ratcheting up pressure on Tesla Inc., calling on the EV maker to disclose how much it spends on settling sexual harassment and racial discrimination complaints.
The New York State Common Retirement Fund, among the country’s biggest public pension plans, filed its shareholder proposal last week following a high-profile racial discrimination case resulting in a $137 million jury award, and days before California took the extraordinary step of suing Tesla.
New York’s resolution asks the automaker to publish how effective its measures are in ending bad conduct in the workplace.
“Recent developments further highlight the need for Tesla to address how the company is preventing harassment and discrimination against employees,” New York State Comptroller Thomas DiNapoli said in an emailed statement Monday. “This kind of alleged behavior should never be tolerated.”
California’s civil rights regulator sued Tesla last week for racial discrimination and harassment after finding widespread mistreatment of Black workers at its Fremont factory. The lawsuit adds to several complaints the company has faced from former workers about racism and sexual harassment.
The New York fund manages about $280 billion, and stands out for publicly putting pressure on Tesla to change its ways. The automaker’s biggest shareholders — Vanguard Group Inc., BlackRock Inc. and State Street Corp.’s investing unit — declined to comment on alleged discrimination, citing their long-standing policies of not discussing individual companies.
Officials at Austin, Texas-based Tesla haven’t responded to a request for comment.
While Tesla’s electric vehicles have played a pivotal role in the shift to cleaner fuels, most ESG investors have long avoided the stock due to the automaker’s shortcomings in corporate governance.
Other socially minded investors such as Calvert Research & Management and Trillium Asset Management own a nominal amount of shares so they can press the company to change its behavior. Both companies declined to comment.
More than a dozen other large Tesla shareholders, including Capital Group, Fidelity Investments, Baron Capital and the California Public Employees’ Retirement System, also declined to comment.
For real change to happen at Tesla, the company’s largest investors need to take action, said Dieter Waizenegger, executive director of SOC Investment Group, which filed resolutions during the last proxy-voting season asking Wall Street firms to perform racial equity audits. Big shareholders should be insisting that the issues of discrimination and harassment are put on the agenda for meetings with Tesla in the next six months, Waizenegger said.
In the wake of protests against racial injustice that swept the U.S. in 2020, BlackRock, Vanguard and State Street Global Advisors have vowed to vote off board directors of companies that fail to address the lack of diversity in their ranks. The three firms backed a shareholder proposal last year that asked Tesla to publish a report on the racial and gender breakdown of its workforce.
Vanguard, Tesla’s biggest shareholder after Chief Executive Officer Elon Musk, said in an October report that it has interacted with Tesla at least annually over the past five years.
The money manager said it discussed the automaker’s efforts to address diversity, equity and inclusion in its workforce during a meeting with the board chair last year. Vanguard described Tesla’s inaugural diversity report in 2020 as a “promising start” and added it wants the company to continue prioritizing “qualitative and quantitative disclosures on workforce diversity.”
In its Feb. 7 shareholder proposal, the New York pension asked Tesla to every year publish details such as how much it has paid in settlements related to harassment and discrimination, as well as specifics on the progress it’s made in reducing the time taken to settle complaints. It also requested the company disclose how many pending cases it’s seeking to resolve either internally or through litigation. The state said civil rights violations can result in substantial costs.
The retirement plan has succeeded in the past in pressing Tesla for change. Four years ago, it filed a resolution asking the company to disclose its process for identifying and analyzing human-rights risks in its operations. Tesla agreed to produce a report.
Separately, the New York fund filed resolutions last month asking companies, including Amazon.com Inc. and Match Group Inc., to conduct independent racial audits of their businesses.