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KeyCorp says that it will undergo a third-party racial equity audit to measure the impact that its diversity and equity programs are having internally and in the communities it serves.
The analysis, believed to be one of the first such audits of a regional bank, will be conducted by the law firm Covington & Burling, which was previously selected to perform similar reviews at Citigroup and Wells Fargo. The results are expected to be published by mid-2024 and will include input from internal and external stakeholders, Key said in a press release Thursday.
The Cleveland bank's decision to undergo the audit follows a request by fair-lending groups and community development organizations that regulators investigate alleged redlining by Key. And it appears to be at least partly the result of pressure from shareholders.
Last fall, a pension fund operated by the labor union Service Employees International Union filed a shareholder resolution urging Key's board of directors to conduct an independent racial equity audit, Renaye Manley, deputy director of strategic initiatives at SEIU, told American Banker.
The decision to submit a resolution was based on concerns about Key's lending record to Black borrowers and the commitments the company made in a $16.5 billion community benefits agreement that was negotiated as part of a 2016 acquisition, Manley said.
The resolution called for an analysis of Key's "adverse impacts on nonwhite stakeholders and communities of color," according to a copy of the text obtained by American Banker.
It also requested information about "steps that Key is taking to mitigate such impacts" and pressed the company to include feedback from a diverse set of sources, including civil rights organizations, employees and customers, and to make the results available on its website.
Manley said that the shareholder proposal was withdrawn because Key "agreed to substantially implement the resolution." As a result, it did not appear in Key's 2023 proxy statement.
"The agreement is they would conduct the audit," Manley said, "and we expect them to reach out to us to gather more information and talk to impacted stakeholders and communities."
KeyCorp, the $197.5 billion-asset parent company of KeyBank, declined on Thursday to make anyone available for an interview.
In a statement, the bank said that it has "discussed the possibility of a racial equity audit with a number of stakeholders" including SEIU, and has "decided to move forward with it at this time."