Wells Fargo? Persistence, persistence, persistence
Wells Fargo has been immersed in consumer protection scandals since September 2016, from more than 2 million deposit and credit accounts opened unbeknown to customers, to unauthorized online bill payments and auto-insurance, and improper mortgage fee charges. Why should we still trust this company then? After all, a group of members of the ICCR corporate engagement coalition, including NEI, had been trying for years to convince the bank to review its business ethics and standards, which the bank judged unnecessary.
But our persistence delivered results. After two successive shareholder proposals filed at the company, Wells Fargo finally agreed to undertake a comprehensive business standards review. This is a chance for Wells Fargo to get to the heart of its culture and ethics issues, explore every aspect of its business and finally live up to its commitment to do what's right. The bank has taken some steps already, including centralizing its risk oversight and strengthening its corporate governance practices. But clearly, more needs to be done. That's where the review we asked for is critical to uncover the root causes of the company's problems. Had we divested immediately after the unauthorized accounts scandal broke, we would have missed an opportunity to induce change at Wells Fargo, as well as missing out on a share price recovery.
On April 24, 2018, Wells Fargo held its 2018 AGM and put forward a refreshed board. Through the review, the bank has an opportunity to rebuild trust and make things right. It will be up to the company to deliver the culture change that's needed to ensure it creates long-term sustainable value for all its stakeholders. But whatever happens, the progress so far is down to persistence, persistence, persistence by a highly-engaged group of responsible investors.