Danaher

Danaher is a diversified business that designs, manufactures and sells laboratory equipment and consumables to clinical and medical laboratories including microscopes, analytical software and imaging and molecular devices. These tools are used in the development of new drugs and for diagnosing critically ill patients. Overall, Danaher’s products offer improved efficiency and reliability.

Objective: For Danaher to report on the effectiveness of Diversity, Equity and Inclusion (DEI) efforts.

Background/issue: For our portfolio companies, routine resolutions occur far more frequently than shareholder resolutions relating to ESG issues. In 2023 a mere 0.5% of the resolutions we voted on were proposed by shareholders, as is consistent with previous years. These proposals also normally related to governance matters, presumably because our investee companies tend to avoid major social or environmental controversies and do not therefore attract regular shareholder resolutions. Our Voting Policy is therefore primarily designed to guide voting on core governance and sustainability issues in relation to routine proposals.

So far in 2024, there have been 6 shareholder proposals filed at our portfolio companies’ AGMs. This includes one filed by the non-profit 'As You Sow' and its co-filers requesting that Danaher publish a report assessing the effectiveness of its DEI efforts.

These parties filed a similar proposal in 2023¹. The 2024 proposal continues to emphasise the need for annual reporting on DEI efforts but is more focused on the process that the Board follows to assess the effectiveness of these programs. It calls for a detailed report that outlines the assessment procedures, the effectiveness of the programs, and relevant goals and metrics for promoting, recruiting, and retaining employees from protected classes​.

Actions:

We supported this shareholder proposal, against the recommendations of company management and ISS, our proxy advisor.

Our view is that Danaher’s work on diversity has been good but there is clearly room for improvement. Danaher outlines its diversity and inclusion strategy in its Sustainability Report, including goals of 40% women and 38% people of colour in the U.S. workforce by 2025. The company also reported hiring success, with 41% of global new hires in 2022 being women and 71% of new hires being diverse².

However, the company does not disclose retention or promotion data by race and ethnicity, which is crucial for increasing diversity across senior levels.

Where we vote against company management or abstain, we typically write to the company in question, explaining our reasons for doing so and seeking further engagement as appropriate.

Outcomes:

Unfortunately Danaher did not respond to our letter. The resolution was not passed however it did receive a just under 40% support from shareholders, indicating a strong level of investor interest in improved reporting on the effectiveness of its DEI programmes.