What to expect from shareholders on ESG this proxy season

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This article from Morningstar is quite informative about what to expect from shareholders – particularly about ESG issues – this proxy season. Here’s an excerpt:

Shareholders have never been more active. According to the Interfaith Center on Corporate Responsibility, members have filed 436 shareholder resolutions in 2022, versus 244 at this time last year. Last year, the ICCR reported, 23 proposals sponsored by members won majority support. While last year was “unprecedented” in terms of proposals on environmental and social issues, “the 2022 proxy season promises to be even more challenging for corporations,” the Conference Board recently wrote.

This year, more companies are adopting proposals before they make it to the proxy statement. “When we file a resolution, we’re getting a very high percentage of companies that jump to agreement,” says Tim Smith, senior environmental, social, and governance advisor at Boston Trust Walden. Smith, a veteran of many shareholder campaigns, believes some 60 companies have acquiesced to shareholder proposals this year rather than let them go to a vote, and that could rise to 100.

And here’s another excerpt:

BlackRock is asking companies to disclose business plans aligned with the goal of achieving net-zero emissions. State Street has extensive guidance for the companies it owns about climate disclosures and related issues.

One related initiative: a shareholder request that Bank of America (BAC), which has been outspoken in its support of net-zero emissions initiatives, adopt a policy to ensure its financing doesn’t contribute to new fossil fuel supplies inconsistent with net zero. Bank of America recommends voting against the proposal at its April 26 annual meeting.

After Bank of America, watch JPMorgan Chase (JPM), which is also being asked to provide financing that’s consistent with a net-zero-by-2050 scenario. JPMorgan hasn’t filed its proxy statement yet but is expected to hold its annual meeting in May.

Climate lobbying will be a theme. For example, Meta Platforms (FB), formerly Facebook, is facing a proposal for more disclosure about corporate lobbying and spending around climate issues. Investors are also seeking detailed disclosure and greater transparency about how well lobbying matches a company’s stated plans to limit global warming.