Johnson & Johnson faces another election battle over racial equity audit

Johnson & Johnson is fighting another shareholder proposal for an independent racial equality audit of the company.

New Brunswick, New Jersey-based J&J (NYSE:JNJ) rejected a similar move at last year’s annual meeting of shareholders, though the vote was far from a landslide. ground. The company also unsuccessfully petitioned the U.S. Securities and Exchange Commission to bar it from voting.

Now an independent audit is up for review again at the April 28 annual meeting after surviving another call from J&J to the SEC.

Proponents of the audit cite ongoing controversies over talcum powder allegedly marketed to minorities. They also point to the decision of the political action committee J&J financial aid Republican members of Congress who voted to nullify the election of President Joe Biden after insurgents stormed the US Capitol.

“Perhaps not since the civil rights era of the 1960s have citizens voiced a clearer and more compelling demand to end racism and discrimination in all its forms. Investors share this concern” , Mercy Investment Services written in an SEC filing in support of its audit proposal. “In healthcare, the status quo has led to mixed outcomes for black Americans. … An audit engages a company in a process of mitigating risks that internal actions alone may not replicate. An objective review that validates current steps and offers recommendations to remove bias can provide shareholders with greater certainty that a smart path is being taken.

Investors backing the proposal include philanthropists Christopher and Anne Ellinger and faith-based organizations such as Providence St. Joseph Health System, Portico Benefit Services and the Sisters of Saint Francis of Philadelphia, among others.

J&J’s Board of Directors Opposes proposal, affirming that Diversity, Equity and Inclusion (DEI) is already part of the company’s credo and core values; that directors and board officers continually review their DEI policies, practices and objectives; and that the company publish two annual reports on the progress of the DEI.

J&J “is committed to addressing racial and social justice through Our race for health equity platform and several other programs, and the requested audit would divert resources from this and other DEI initiatives,” the council said in its opposition to the proposal. “The company views DEI as a key driver of its success and intends to continue to publicly demonstrate its commitment to DEI in all aspects of its business.”

Approximately one-third of voting shares supported a similar audit proposal in 2021, including one of J&J’s main shareholders: BlackRock, which owns nearly 8% of J&J’s shares. The New York-based investment firm noted he voted for the proposal “because we believe an audit would complement the company’s current programs to advance racial equity and may provide new insights to accelerate its progress.”

In the weeks leading up to J&J’s 2021 shareholder meeting, Blackrock said it was planning a similar audit of its own company, joining companies like Citi, Facebook, Starbucks, Airbnb and, more recently, JPMorgan Chase.

Vanguard Group, however, owns nearly 9% of J&J shares and voted against the 2021 proposal, saying “sufficient action or change has been implemented and (the) proposal is too prescriptive.”

One day after the 2021 J&J Annual Meeting, nearly 40% of voting shareholders of Abbott Laboratories (NYSE:ABT) supported a proposal for a report “disclosing the company’s plan, if any, to promote racial justice.”

The audit offered by Mercy Investment Services should not be confused with another proposal filed by a conservative organization which warned that DEI policies can be discriminatory.

The J&J Board of Directors opposes this proposal on the same grounds, but added that “certain views relating to DEI’s efforts and racial equity [in the proposal] run directly counter to the company’s beliefs and experience that adopting DEI is an important part of our continued and future success.

With nearly $23 billion in annual revenue, J&J’s medical device business makes it the second-largest medical technology company in the world, according to Medical design and outsourcingof the latest Big 100 ranking.

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