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Jan 10, 2023

Shareholder rallying behind ESG proposals sparks year-on-year increases

Number of proposals filed globally grows by 14 percent

Shareholder support for ESG-related proposals has grown by 14 percent year on year, with 2022 recording a total of 79 shareholder proposals filed globally, compared with 69 proposals the previous year, according to the latest survey from SquareWell Partners.

Most recently, shareholders have rallied behind the Say on Climate concept that originally emerged in 2019. Its purpose is to shed light on the range of proposals that seek shareholder opinion in relation to a company’s approach to climate change. The initial aim of the campaign was for companies to put their climate transition action plans to an annual non-binding shareholder vote.

Shareholders within financial sector companies were reportedly more on board with climate-related proposals in 2022, accounting for close to 40 percent of the total number of filings that year, says SquareWell. This is followed by companies in the energy sector, which accounts for around 20 percent.

Shareholder rallying behind ESG proposals sparks year-on-year increases
Carmen Ng, SquareWell Partners

Despite SquareWell finding more shareholder engagement in its report, the ESG Integration Forum – US, hosted by Corporate Secretary and IR Magazine in New York, found that companies and investors are seeing some pushback against the trend toward supporting ESG-based goals.

But the forum did note how ESG continues to hold great sway among issuers and others as topics such as climate change and diversity remain top of mind for many of their stakeholders, from either a values or valuation-driven perspective.   

‘Essential components are still missing’

The number of management-sponsored say-on-climate proposals more than doubled in 2022 compared with 2021 where there were 78 percent of first-time proposals. These were predominately filed at French companies in the real estate sector and UK companies in the financial sector.

But essential components are still missing in half of the climate transition action plans that came to a vote in 2022, warns SquareWell.

‘Weaknesses of climate action plans tend to surround the lack of short-term emissions reduction targets, setting science-based targets and communicating a Paris-aligned lobbying policy,’ the report finds.

SquareWell collected data from all ESG-related shareholder proposals filed between January 1, 2018 and August 1, 2022. The findings reveal that 153 companies across 12 countries received a total of 291 climate-related shareholder proposals.