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Mar 17, 2022

Record-breaking proxy season for ESG proposals, according to new report

More than 500 ESG proposals filed in 2022 season, up 20 percent on previous year

The 2022 proxy season was a record breaker for ESG proposals, with Michael Passoff, CEO of Proxy Impact and co-author of a new report on the season, saying ‘you can feel the momentum building for real corporate change’.

Commenting on the 529 ESG proposals that have been filed this year, Passoff says there is ‘unprecedented support for environmental and social shareholder proposals.’ The Proxy Preview 2022 report, a comprehensive look at the season from As You Sow, Proxy Impact and the Sustainable Investment Institute, predicts that around 300 proposals could be up for a vote at AGMs this year.

The report notes that shareholders have already won five majority votes on issues ranging from sustainable packaging and net-zero emissions to gender/minority pay disparity and racial justice, suggesting the wins so far could take the total beyond last year’s record-breaking 39 majority vote wins.

The report authors say shareholders have gone further on established ESG themes.

‘Many more proposals this year seek quantitative reporting on climate change and diversity, implying companies must work harder to satisfy increasingly insistent stakeholders,’ says As You Sow, in a release announcing the publication of the new report. ‘Proponents are focused on how companies can cut greenhouse gas emissions to zero, and how they influence politics, combat systemic racism and treat workers.’

But other themes are also emerging. ‘Key ideas, many of them new, raised in 2022 proposals include formal audits for climate change plans, environmental justice assessment, chemical footprinting, misalignment between stated corporate values and political influence spending, liability from misclassified workers in the US supply chain, more comprehensive workplace diversity program reports and the long-term impact for investors of shifting costs from balance sheets to society at large,’ notes As You Sow.

As well as the growing interest in ESG issues, As You Sow says ‘a new direction’ at the SEC means company efforts to block proposals are increasingly failing. At the same time, a lawsuit is under way to try to overturn a Donald Trump-era rule that ‘makes it harder to file and resubmit proposals… even though the new restrictions seem only to have spurred more proposals,’ it adds.

Heidi Welsh, executive director of the Sustainable Investments Institute and co-author of Proxy Preview 2022, says shareholder proponents ‘want specific plans for carbon-neutrality but they also see big problems with exposure to the rancorous social policies pursued by company-supported lawmakers, especially in statehouses.

‘Gauzy promises clearly are not sufficient,’ she says. ‘With some companies releasing more details on diversity and environmental impacts, those that don’t will really stand out.’

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...