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Jan 11, 2024

Support for environmental shareholder proposals fell in 2023 as anti-ESG investor sentiment grows

Big investors supported significantly fewer environmental proposals last year, finds Georgeson

Investor support for environmental shareholder proposals was lower last year than in 2022, with big players like Vanguard, Capital Group and Dimensional supporting less than 10 percent of environmental proposals, data shows.

A total of 68 anti-ESG proposals were put to a vote during 2023’s proxy season: four that tackled environmental issues, 46 social proposals and 18 concerning governance matters, according to Georgeson’s latest Investor Voting Report.

Of the largest institutional investors, Northern Trust continued to be most likely to support environmental proposals, though – interestingly – it was the single largest supporter of anti-ESG proposals, backing 16 of 68. But none of those anti-ESG proposals received majority support and most investors voted against them, Georgeson finds.

As in several recent years, social issues continued to attract strong shareholder support. Human capital management and diversity-related votes accounted for more than 140 proposals filed in 2023, but only one diversity, equity & inclusion-related proposal passed last year.

Say-on-pay proposals remained popular among the largest institutions, receiving an average support of 90 percent, with BlackRock, Vanguard and State Street supporting the highest proportion. Support for board elections and re-elections fell, while there was a growing number of executive severance proposals, the data shows.

In terms of individual institutions, Wellington shifted its support for ESG proposals drastically in 2023 with only 32 percent of votes in favor of ESG proposals, compared with 88 percent in 2022, according to Georgeson data. State Street’s support for ESG proposals also dropped in 2023, down from roughly 50 percent of proposals voted for in 2022 to just 37 percent last year.

‘In 2023, we have noted that investors have begun to increase attention on the topics of biodiversity and natural capital,’ a Georgeson spokesperson says. ‘Of the largest institutional investors reviewed in this report, we note that BlackRock, Norges and Wellington explicitly reference natural capital and/or biodiversity in their stewardship guidelines.’

The proportion of proposals supported by BlackRock, which has been tiptoeing out of the ESG space for some time, fell further from 37 percent in 2022 to just 15 percent of proposals in 2023. Last year, the asset manager voted against 40 of the 44 greenhouse gas reduction proposals during proxy season and voted for only 9 percent.

A report by BlackRock on its voting results last year shows that, globally, it voted in favor of only 26 out of 399 environmental and social proposals.

‘We observed a greater number of overly prescriptive proposals or ones lacking economic merit,’ Georgeson’s report states. ‘Importantly, the majority of these proposals failed to recognize that companies are already meeting their asks.

‘Because so many proposals were over-reaching, lacking economic merit or simply redundant, they were unlikely to help promote long-term shareholder value and received less support from shareholders, including BlackRock, than in years past.’

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