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Sep 14, 2023

US investors back fewer environmental and social proposals during proxy season

BlackRock and Vanguard trend away from supporting ESG proposals

US investor support for environmental and social (E&S) proposals fell by 10 percentage points during this year’s proxy season, according to a Morningstar report.

The proxy season research finds that support for E&S proposals in the US were backed by only 20 percent of shareholders in the 2023 proxy year, down from 30 percent in 2022.

‘The 2022 proxy year marked the first year that the majority of shareholder resolutions addressed E&S themes, rather than governance themes,’ the report says. ‘This trend continued in 2023.’

Despite the lapsing support, Morningstar recorded a 23 percent increase in the number of resolutions on E&S topics in 2023 to 337, up from 273 in 2022.

‘Amid the higher volumes of E&S shareholder proposals in the last two proxy years, there has been an increase in the number of resolutions that asset managers see as overly prescriptive,’ the report adds.

Big players

On the social side, resolutions relating to such issues as workplace fairness and safety continue to represent more than 70 percent of key resolutions, Morningstar shows.

Big players like BlackRock and Vanguard have also lessened their support for ESG-related proposals during this year’s proxy season. Vanguard, which has $8 tn in assets under management, supported only 2 percent of ESG-based proposals this year, compared with 12 percent in 2022.

Meanwhile, BlackRock voted in favor of only 26 out of 399 E&S proposals. This is a significant drop from last year's annual report data which saw the investment giant voted in favor of 64 out of 325 ESG-related proposals and 84 out of 184 proposals in 2021.