Microsoft shareholders vote to force company to better report sexual harassment data

Microsoft Corp. shareholders voted on Tuesday to force the company to more transparently address sexual harassment claims via independent investigations and public reporting.

The proposal, approved during the company's annual shareholder meeting, was brought by Arjuna Capital, an investment firm known for its Environmental, Social, and Governance (ESG) activism. The vote may be seen by some as a win for activist investors seeking to drive change from the inside out in the private sector.

Under the proposal, Microsoft would have to prepare and release a report "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," according to a statement released by the investment firm.

Microsoft's board urged shareholders to strike down the proposal, citing existing policies and mechanisms in place to tackle sexual harassment in the workplace.

Still, some 78% of shareholders voted for the proposal, Arjuna Capital said after the meeting. The firm said that, immediately following the vote, Microsoft committed to a third-party, independent assessment of its sexual harassment processes, in addition to public reporting on them.

"A majority of Microsoft's investors are now calling on the company to shine a bright light on sexual harassment. The fact that executives responded so quickly following the vote is a sea change from how Microsoft has dealt with this issue in the past," Natasha Lamb, managing partner at Arjuna Capital, said in a statement.

Microsoft confirmed the proposal had been approved in a statement following the meeting, adding that, "Microsoft already shares with employees annual data on the volume of sexual harassment concerns raised and the results of harassment investigations and has adopted plans to begin annual public reporting."

During the question-and-answer portion of the shareholder meeting, Microsoft's President and Vice Chair Brad Smith said the issue of sexual harassment is "of enormous importance" to Microsoft.

"There are new steps that we are going to take that we were thinking about, and I think that the resolution and the dialogue we've had has helped us advance our decision-making," Smith added. "So for one, we will take new steps to be more transparent as a company. We have been sharing more data internally. We recognize that there are shareholder interest, and so we'll share more data externally as well. You'll see us publish more reports, just to reflect where this is going."

Smith also pledged to bring in a third party to do an "independent assessment of all of the work that we do to investigate" sexual harassment cases.

"We'll share what that independent report says and we will listen," he added. "And if there's recommendations for change, we will think hard about making them."