Investor support for environmental and social activism has generally declined at this year’s annual meetings of corporate America, reflecting hesitancy over increasingly normative proposals and mounting political pressure.
A range of businesses, including Amazon, ExxonMobil and UPS, have seen noticeably less enthusiasm.
Petitions demanding that U.S. companies take more action on climate change had an average of 23% of shareholder support as of the end of May, down from 36.6% last year, according to the nonprofit data provider Institute for Sustainable Investing. Shareholder proposals on human rights received 21.6 percent of the vote, up from nearly a third in 2022.
Shareholder proposals, which are generally non-binding in the United States, have increasingly become an activist tool for religious groups, environmentalists and other socially engaged investors. A record number is expected to be filed this year, according to the Conference Board and research group Esgauge.
A policy change in the United States in 2021 allows more petitions to go to the vote. As a result, the proposal has evolved from a banal request for disclosure to a specific demand for companies to take action.
While the number of petitions has increased, there has been no commensurate increase in support. Only five U.S. shareholder resolutions on environmental and social issues this year have received majority support from company shareholders, down from more than 35 in 2022 and 2021, the Sustainable Investing Institute said.
Benjamin Colton, managing director of $3.6 trillion asset manager State Street Global Advisors, said: “We’ve seen increased transparency in corporate disclosure, especially from large companies, as well as overly prescriptive behavior on the corporate ballot. proposals.” “Our observation is that these dynamics have led to an overall decline in investor support for environmental and social shareholder proposals.”
Only 11% of ExxonMobil shareholders last week backed a petition to set emissions reduction targets in line with the Paris climate agreement, down from 28% last year. At Amazon, a resolution calling for more information on the risks of plastic packaging received support from less than a third of shareholders, down from nearly half last year.
There are notable exceptions, however, when several of the largest U.S. banks vote on climate policy. About three in 10 voting shareholders of Goldman Sachs, Wells Fargo and Bank of America backed a resolution requiring boards to develop a climate transition plan, rising to 35 percent at JPMorgan.
Plastic pollution has inspired a group of investors in Restaurant Brands International, the company behind Burger King, and Yum Brands, the parent company of KFC, Pizza Hut and Taco Bell, to ask the company to report on how it uses less plastic.
But 25 percent of UPS in the shipping business support diversity, equity and inclusion proposals this year, down from 37 percent in 2022.
The shareholder voting business is also embroiled in a political battle surrounding the rise of environmental, social and governance (ESG) investing. Florida Gov. and presidential candidate Ron DeSantis last month signed a law requiring the state’s pension funds to vote on stocks only based on “money factors.” In December, Senate Republicans accused asset managers BlackRock, Vanguard and State Street of using shareholder voting power to “advance the goals of a free society.”
Big asset managers have said publicly that political attacks have not changed their voting policies, said Matteo Tonello, managing director of the Conference Board. But, “I do think their reaction to the backlash has made them more cautious and sensitive to the implications of these (voting) policies.”
Things are different outside of the US. European companies’ average support for environmental and social proposals edged up to 11.6% in 2023 from 10.6% last year and 5.5% in 2021, according to data provider Diligent. Fewer shareholder proposals were submitted in Europe – as of May 31, only eight environmental or social proposals had been voted on.
According to Diligent, support for environmental and social solutions outside Europe and the US is 17% this year, up from 11.3% last year.
Conservative activists in the U.S. have also filed a record number of shareholder proposals since the SEC policy change. Their questions also failed to gain support from institutional investors and asset managers.
BlackRock said its shareholder vote has been focused on “delivering long-term financial value to our clients”. The company’s support for shareholder petitions has declined in the last year. State Street’s Colton said the asset manager’s voting record “has been pretty consistent over the years.”
Pioneer declined to comment.
The abortion-related petition, filed after the U.S. Supreme Court struck down federal abortion rights last year, failed to win more than 12% support among Tenet Healthcare, American Express and Eli Lilly. At Travelers insurer, a proposal to require the company to set a deadline to stop underwriting new fossil fuel projects received 8.8% support in May, down from 13% last year. Proxy adviser Institutional Shareholder Services said the company had disclosed most of what the shareholder petition requested.
Brian Bueno of Farient Advisors, a consultancy, said shareholder proposals are “becoming more and more normative”. For the organizations that typically file the most petitions, “what they’ve done this year clearly hasn’t worked,” he said. “We’re going to end up seeing that their efforts this year are not as effective as they have been in years past.”
Additional reporting by Brooke Masters in New York
climate capital
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s commitment to environmental sustainability? Learn more about our science-based goals here