Shareholders Turn to Court to Push Greater Workplace Diversity

Shareholders interested in corporate diversity and inclusion practices and workplace culture are turning more toward litigation as a tool to hold companies accountable.

Lawsuits from shareholders claiming their investments are threatened by bad work culture present a new realm of liability for companies that previously could’ve handled those allegations through arbitration and non-disclosure agreements. Unlike many employees, shareholders typically aren’t bound by these types of agreements.

A shareholder suit against Tesla Inc. earlier this month is the latest example of this emerging tactic. The suit accuses the electric-vehicle maker’s officers and directors of allowing a “toxic workplace culture” to fester ...