There Were More ESG Proposals Than Ever This Year. But Fewer Passed
Hannan Zhang, July 19, 2022
The anti-woke movement, greenwashing concerns, and a lack of standards all contributed to the decline of successful shareholder proposals in the current proxy season.
The enthusiasm for sustainable investing is higher than ever. But in terms of shareholder proposals that were actually passed in the proxy season, the picture looks less rosy.
According to the latest proxy season report by Freshfields, there were a record number of shareholder proposals for companies in the Russell 3000 index, mostly related to environmental, social, and governance issues. But compared with data from last year, the percentage of proposals that received majority support declined in 2022. Only 9 percent of the 208 environmental and social proposals were approved by more than half of the shareholders this year, compared with 27 percent of the 131 measures in 2021.
Pamela Marcogliese, partner at Freshfields, said that over the past few years, voters have become more discerning, which makes it harder for the proposals to receive majority support. “We are no longer starting from a place where shareholders [are] willing to approve anything,” Marcogliese told II in an interview. “They are becoming much more thoughtful [about] what the companies have been doing.” She added that the rising number of shareholder proposals is due in part to the fact that the regulator has made it harder to exclude them as a result of changing guidance earlier this year.
The decrease in majority support for environmental and social proposals coincides with the rise of the “anti-woke” movement in the investment management industry. BlackRock, for example, became the target last year of an attack-ad campaign that focused on its ESG policies and investments in China. Strive Asset Management, an anti-ESG firm backed by Peter Thiel and Bill Ackman, poached a longtime CalPERS investment manager to lead the products and investments team in May. The lack of ESG standards and concerns over greenwashing have also contributed to doubts on the part of some investors.
Read the full Institutional Investor article here.