BOSTON--(BUSINESS WIRE)--Microsoft published a detailed 50-page report today assessing the effectiveness of the company’s sexual harassment and gender discrimination policies, as well as an implementation plan outlining the company’s commitment to improve policies and practices. The audit and implementation plan were published in response to a shareholder proposal that garnered a 78% vote of investors nearly a year ago at Microsoft’s 2021 annual meeting. The proposal, brought forth by ESG (environmental, social, governance) investment management firm Arjuna Capital, asked Microsoft “to release a transparency report to shareholders assessing the effectiveness of the company’s workplace sexual harassment policies, including the results of any comprehensive independent audit/investigations, analysis of policies and practices, and commitments to create a safe, inclusive work environment.” It further asked for the “results of any independent investigation into executive level allegations, including recent Gates’ allegations; steps taken (or that could be taken) to hold employees and executives accountable; [and the] number of sexual harassment cases investigated and the resolution.”
“Microsoft has taken an unprecedented step forward to effectively address sexual harassment in the workplace,” said Natasha Lamb, managing partner at Arjuna Capital. “The transparency report and implementation plan provide a leading example for companies to follow. We learned from the #MeToo movement that sexual harassment is no longer an issue that can be kept in the shadows. It is a material business risk that can and should be addressed with transparency and accountability.”
The transparency report was written by independent law firm ArentFox after an extensive audit. It found several of Microsoft’s sexual harassment policies are “consistent with best practices.” These include providing various harassment reporting options, holding managers accountable to reporting complaints, and working to prevent employee retaliation. The report also identified areas where Microsoft could improve or enhance its policies, including clearly defining sexual harassment and discrimination in its policies, adding specifics about the investigation process and potential investigative outcomes so employees are better informed, improving the assessment of employees’ investigation experiences, and establishing credible transparency around remediation.
Notably, the report only briefly touches on the Bill Gates investigation, offering little to no new information and citing privacy concerns for this lack of transparency. However, the implementation plan regarding “Leadership Accountability” commits that Microsoft “will implement changes to emphasize that senior leaders will continue to be held accountable for substantiated policy violations and behavioral concerns… [will] earlier identify challenges and trends for use by the corporate Senior Leadership Team in discussions on talent, culture and acceptable leadership behavior…, [and] will develop a new cross-function process for discipline decision-making in investigations involving senior leaders.”
In the implementation plan, Microsoft committed to address several of ArentFox’s recommendations. Next steps include strengthening internal policies and practices around harassment and discrimination, improving investigations and employees’ experience with investigations, expanding transparency and accountability of investigations, increasing gender diversity in leadership roles, and improving data and systems that support managing sexual harassment complaints. Notably, Microsoft “will begin annual public reporting …of… sexual harassment and gender discrimination policies, including the total number of reported sexual harassment concerns, percentage of those substantiated, and types of corrective actions taken.” Microsoft plans to implement all recommendations by the end of FY2023.
Arjuna filed the shareholder proposal requesting greater transparency into how the company handles sexual harassment allegations after highly publicized sexual harassment allegations were brought forth against former CEO, chairman, and founder Bill Gates. Additionally, a May 2022 Business Insider article reignited speculation about workplace sexual harassment after executives were allegedly shielded from sexual harassment disciplinary action due to their leadership status within the company.
The risk of failing to remediate issues of workplace sexual harassment is considerable, as it can reduce employees’ trust in the process and perpetuate a culture of harassment and discrimination, affecting companies’ ability to retain and recruit diverse talent. Several companies, including Google and 21st Century Fox have committed hundreds of millions of dollars to settle shareholder lawsuits alleging mismanagement of sexual misconduct. Other companies like Wynn Resorts have seen market capitalization substantially drop following sexual harassment allegations.
Arjuna Capital is a sustainable and impact investment firm that works with high-net-worth individuals, families, and institutions to invest their assets with a lens toward Environmental, Social, and Governance (ESG) risk and opportunity. Natasha Lamb and Arjuna Capital have been recognized for using shareholder resolutions to promote gender and racial pay equity in the tech, banking, and retail sectors. Lamb was named to the “Bloomberg 50” list of influencers who defined global business in 2017. For more information, visit www.Arjuna-Capital.com.
