A Wells Fargo bank branch in New York. (Photo: Bloomberg)
Wells Fargo & Co. agreed to publicly report on the root causes that led to a rash of ethical lapses in recent years, a group of investors said.
The group, led by the Interfaith Center on Corporate Responsibility and including about 20 religious organizations as well as state officials from Rhode Island and Connecticut, said Tuesday they would withdraw a shareholder proposal on the issue following the bank's decision. They had sought to put it to a vote at the lender's annual meeting in April.
"They were in a culture where they believed their vision and values have carried them for the past 30 years and were continuing to carry them," said Sister Nora Nash, who oversees retirement funds for Sisters of St. Francis of Philadelphia, which led the proposal. "Obviously, there was tremendous risk in their culture, and we need to take a serious look at the code of ethics, accountability and really look at the needs of the customer and community."
The investors asked Wells Fargo to produce evidence that its incentive programs are aligned with clients' interests. They also asked the lender to report on how it is strengthening risk management and controls to prevent such lapses.
'First Step'
"Wells Fargo has agreed to prepare and publish a business standards report on our website," Ancel Martinez, a spokesman for the San Francisco-based bank, said in an emailed statement. "We look forward to continuing to work with the members of the Interfaith Center on Corporate Responsibility."
Rhode Island Treasurer Seth Magaziner, who oversees the state's public pension fund, called the bank's decision "a first step toward changing the culture at Wells Fargo that harmed a lot of customers and shareholders."
Wells Fargo has yet to put behind it 18 months of scandal in its retail-banking business, where employees under pressure to meet aggressive sales goals may have opened millions of accounts in customers' names without permission. The bank has said it's facing at least three major probes, including one by the U.S. Department of Justice.
Separately, Well Fargo agreed this week to put a shareholder proposal on its proxy ballot from the New York State Common Retirement Fund that seeks more information about employee incentives beyond its executive officers, according to correspondence with the U.S. Securities and Exchange Commission.
