Clothing company Urban Outfitters is in the hot seat. And a mutual fund company has put them there. Calvert Investments Management Inc. is calling for Urban Outfitters to diversify its board of directors. Currently, the Philadelphia-based company has no women or minorities on the board.
Calvert, a company that specializes in sustainable and responsible investments, is co-sponsor of a shareholder resolution urging the company to “affirm that diversity is valued”. The other sponsor is Denise L. Nappier, treasurer of Connecticut, as trustee for the Connecticut Retirement Plans and Trust Funds.
“At Calvert Investments, we view board diversity as an essential measure of strong corporate governance and believe that diversity increases the likelihood of companies making the right strategic and operational decisions,” says Aditi Mohapatra, senior analyst at Calvert.
“Within the retail industry, it is especially critical for companies to be sensitive to changing consumer demographics and demands. Therefore, we believe it is essential that Urban Outfitters have a board of directors that reflects the diversity that exists within its target markets,” he says.
According to Mohapatra, Urban Outfitters has been reluctant to heed the diversity call. “The board of Urban Outfitters claims it agrees with the “merits of achieving diversity” however the it gives no indication of how they plan to move from having no women and no minorities to a board that is more reflective of its shareholders, consumers and employees,” says Mohapatra. “Two of the company’s major brands–Anthropologie and Free People–which make up approximately 40% of net sales- target their merchandise only to women. Further, 90% of Urban Outfitters’ S&P 500 peers have at least one woman on their board of directors. As investors, we want to ensure that the company benefits from a strong board that reflects a full range of available talent and reflects the diversity that exists within its target markets.”
Nappier and Calvert have sent Urban Outfitters its recommendations. “The proposal recommends that the company expand director searches to include nominees from both corporate positions beyond the executive suite and include non-traditional environments such as government, academia, and non-profit organizations,” explains Mohapatra. “We are encouraging the company to develop its current search process to ensure women and minorities are included among the pool of candidates considered. We are not recommending that the board limit its nominations for director seats to women and minority candidates but rather that the board regularly evaluate and assess applications for such positions from diverse candidates.”
For Calvert, if Urban Outfitters diversifies its board, it would help the company´s bottom line and longevity. “In our view, companies combining competitive financial performance with fair and equitable working environments will recognize gains in both the workplace and marketplace and be better positioned to generate long-term value for their shareholders,” Mohapatra points out.
Urban Outfitters did not respond to interview requests for this article. Urban Outfitters sells clothing under the brands Urban Outfitters, Anthropologie, Free People, BHLDN, Leifdottir and Terrain.