Critical ESG issues, including plastic pollution and declining biodiversity, are failing to make the agendas of shareholder meetings despite rocketing numbers of ESG proposals over the past decade, according to a nonprofit financial think tank.
ESG practices, metrics and regulations have been a strong theme during the US proxy voting season. The number of ESG proposals tabled for discussion at annual meetings has shot up 80 percent, finds research by Planet Tracker. But its new report reveals that out of 12,492 ESG proposals submitted in 2021, 93 percent were actually governance-related, mostly submitted by management about compliance issues such as approving minutes and auditors. Environmental and social factors accounted for just 5 percent and 2 percent, respectively.
‘Perhaps most disturbingly, many important issues never or rarely make the annual shareholder meetings,’ London-based Planet Tracker adds. ‘Over the last five years, for example, plastic issues have been raised only eight times and the word ‘biodiversity’ has only once made the agenda.’
Planet Tracker says investment giants, including State Street, UBS, Vanguard and BlackRock, hold a significant number of votes at these proxy meetings due to the size of the funds under their management, giving them considerable sway over the approval of proposals.
‘While their public statements make them appear committed to responsible ownership and stewardship, these top asset managers often struggle to present a unified approach, voting very differently by region,’ the nonprofit says.
John Willis, director of research at Planet Tracker, notes in a statement that ESG headline figures for annual meetings over the past decade can deceive. ‘Hopefully, this year we will witness a new momentum on an assortment of ESG issues, not least on environmental topics where many CEOs have made public statements on net-zero targets,’ he says.
‘But we note the scarcity of proposals on a number of important global issues. If the investment giants are unprepared to engage with corporates on these topics, they should promptly introduce direct voting for the many investors they represent.’