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Wells Fargo agrees to racial fairness audit

Wells Fargo plans to conduct a racial fairness audit, asking an outdoor legislation agency to evaluate the financial institution’s workforce variety and decide how its enterprise practices are affecting communities of shade.

The $1.9 trillion-asset financial institution has employed the legislation agency Covington & Burling to conduct the assessment and plans to publish the findings by the top of 2023, Wells Fargo mentioned in a press launch.

“Commissioning this work is a crucial subsequent step in reinforcing our dedication to racial fairness and shutting the wealth hole on this nation,” CEO Charlie Scharf mentioned within the financial institution’s press launch Tuesday.

Wells Fargo CEO Charlie Scharf, who beforehand confronted criticism over feedback in regards to the obtainable pool of numerous banking expertise, described the racial fairness audit as a part of an effort by the financial institution to shut the racial wealth hole.


A financial institution spokesperson declined to remark additional.

The choice comes amid ongoing strain on Wells Fargo to grapple extra comprehensively with problems with variety, equality and inclusion. Earlier this yr, the San Francisco-based financial institution really useful that shareholders vote towards a proposal calling for its board members to supervise a assessment to evaluate adversarial impacts on communities of shade.

In March, the financial institution cited “vital and ongoing” variety, fairness and inclusion initiatives as causes to vote towards the shareholder proposal.

Shareholders did reject the proposal, however it garnered considerably extra assist than it had in 2021— with 36% of shareholders voting in favor, excluding those that abstained from voting, a rise from 13% final yr.

Since Wells Fargo’s annual assembly in April, the financial institution has acquired new scrutiny in reference to variety initiatives. A New York Occasions article in June alleged that the financial institution had carried out pretend job interviews with minority candidates to fulfill its numerous hiring coverage.

Wells Fargo briefly suspended that coverage earlier than reinstating it final month.

Earlier within the yr, Bloomberg reported that Wells Fargo had accredited fewer than half of all candidates who sought to refinance their mortgages in 2020, considerably lower than a number of different giant lenders. Wells has known as that discovering “oversimplified.”

In 2020, Scharf confronted criticism after he reportedly informed staff that the financial institution had hassle reaching variety objectives due to an absence of certified minority candidates. Scharf later apologized for what he known as “insensitive” feedback.

In recent times, traders and public activists have elevated strain on companies to make social justice commitments and act on variety initiatives. Help for company variety insurance policies, together with the disclosure of worker demographics, have gained momentum.

Final October, Citigroup grew to become the primary main U.S. business financial institution to conform to an outdoor racial fairness audit, a assessment that is centered on the corporate’s 2020 pledge to spend at the very least $1 billion on banking-related initiatives for Black-owned companies and communities of shade. Citi’s audit will even be carried out by Covington & Burling.

“Firms perceive these points are essential and never going away,” Edgar Hernández, assistant director of strategic initiatives on the Service Workers Worldwide Union, mentioned in an interview. “Buyers need a greater sense of what firms are doing to deal with racial fairness.”

SEIU, a North American labor union representing 2 million employees, has launched shareholder proposals to carry racial fairness audits at varied monetary establishments, together with Wells Fargo, Goldman Sachs, State Avenue and BlackRock.

All of the proposals have failed, however a few of the firms, together with BlackRock, Morgan Stanley and now Wells Fargo, have nonetheless chosen to conduct a assessment.

“These audits present firms alternative to raised perceive their enterprise practices, shortcomings and the way their merchandise affect communities of shade,” Hernandez mentioned.

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