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Arjuna Capital: Investors Cast Majority Vote Pressing for Sexual Harassment Accountability at Microsoft Annual Meeting

Microsoft shareholders approved a shareholder proposal brought forth by investment management firm Arjuna Capital, asking the company to transparently address sexual harassment claims through independent investigations and reporting. 78% of shareholders voted "for" the proposal. Majority votes on independent proposals are rare and immediately following the vote results, Microsoft committed to a third-party, independent assessment of its sexual harassment processes, in addition to public reporting. Microsoft also agreed to publish median racial and gender pay gaps, after 40% of shareholders voted "for" Arjuna's pay gap proposal.

After the highly publicized sexual harassment allegations brought against former CEO, chairman, and founder Bill Gates, Arjuna Capital voiced concerns about a potential issue of systemic sexual harassment and related human capital risks, including retaining and attracting talent. Today's votes underscore the importance of addressing sexual harassment, as well as racial and gender discrimination, head on. The votes also highlight the material importance of human capital management and governance to institutional investors: the "S" and "G" in ESG (Environmental, Social, Governance) investing.

"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," said Natasha Lamb, Managing Partner at Arjuna Capital. "And while the accusations against Bill Gates are only the latest revelations in what has been a long-seated, poorly managed problem, it's significant that Microsoft is now listening to its shareholders and committing to transparent, unbiased, independent reporting."

In 2015, Microsoft attracted national attention after its employees brought forward a class-action lawsuit with 238 complaints alleging gender discrimination and sexual harassment. In 2018, this class-action documentation was unsealed revealing hundreds of cases unaddressed by HR. Microsoft responded with a commitment to better manage future investigations. However, a year later, in 2019, a company-wide email thread circulated detailing employees' current experiences with workplace sexual harassment. Microsoft responded with yet another commitment to reform its culture and publish internal investigation data. In February 2020, employees stated this data was still not available and there were no signs of an improved workplace culture.

The risk of inaction regarding sexual harassment is considerable. 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.

In June 2021, Arjuna Capital filed the proposal calling on Microsoft to 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."

Ahead of the annual meeting, Microsoft responded to Arjuna's proposal with a commitment to better resource and publish the results of internal investigations. However, the company notably lacked a commitment to best-practice independent investigation and reporting on the executive-level probe into Mr. Gates. Due to Microsoft's history of unfulfilled commitments to improve internal HR processes related to sexual harassment, Arjuna Capital brought the resolution to today's shareholder vote.

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.

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