Shareholder Resolutions Break Records, Again!
Despite the politicization of ESG as Woke Capitalism over the past two years, shareholder advocates filed over 500 resolutions, a 5% increase from 2023. Fueling this growth, ironically, was a nearly 20% rise in anti-ESG proposals, 71% of which targeted companies on their management of social-related issues. But pro-ESG proposals also increased.
You see this reflected in continued shareholder focus on corporate disclosure and reduction of scope 3 emissions risk in alignment with a 1.5℃ pathway, and associated concerns about political risk from corporate lobbying and associations on climate. You also see this in proposals emerging on related inter-related issues like deep sea mining, nature biodiversity, and environmental justice/just transition related proposals.
On biodiversity, As You Sow engaged Tesla and General Motors on the emerging issue of deep sea mining, stating that “Absent deep sea mining policies is one of many areas where shareholders see their companies out of step with national and global goals to protect nature and the innumerable services they offer to companies, communities, and the world. This is only the beginning of biodiversity proposals.” Overall, the number of nature-related proposals has increased by two from last year, and biodiversity risk disclosure proposals have increased from zero to five this year, with nature related disclosures rising overall from 2 to 20.
Similarly, just transition proposals increased from 16 to 21, with Investors’ Advocates for Social Justice (IASJ) filing environmental justice (EJ) proposals at Honeywell, Chase, and JPMorgan. For background related to Just Transition risk, see our environmental justice blog series and learnings from our environmental justice workshop.
Not surprisingly, given its rapid shareholder growth and media hype, AI has quickly become a hot topic area, with proposals surrounding several governance issues such as transparency, ethics around misinformation and human rights, generative AI, and targeted advertising as well as environmental, related to the implications of AI’s massive energy consumption and impact on grid resilience and local communities and environments.
Implications and Outlook
The shareholder advocacy process, long the domain primarily progressive advocates, is now increasingly leveraged by conservative advocates, forcing corporate leaders to navigate contrasting shareholder positions. Some adept corporate leaders are ably managing this tension, challenging more politically motivated resolutions, while staying attuned to evolving investor priorities on social and environmental issues that are or may likely materially affect their business. Issues like child labor or environmental degradation from climate change, once considered fringe issues, are now material issues actively managed by corporate leadership and boards, meaning strong, strategic governance is critical.
While support for anti-ESG proposals remains scarce, with an average of 2.8% shareholder approval, that was once the case for some of today’s mainstream issues, so they must be watched to determine whether they are a wedge issue fad or have staying power.
The annual rise in shareholder resolutions suggests anti-ESG proposals will rise further in 2025, but several factors, such as political outcomes in countries worldwide and their approaches to regulating corporate disclosures on social and environmental risks, will impact shareholder advocacy trends. In the U.S., a more conservative Supreme Court is challenging regulatory authority, and the political power may ping-pong back to the Republicans, promising a further rightward regulatory shift.
Despite, or perhaps in spite of, the politics of ESG, there was lots of constructive engagement between investors and companies this past year that led to numerous successful resolutions. Of the 256 climate proposals filed, nearly one-third were withdrawn due to corporate commitments. As F500ers often repeat, people can only “work at the speed of trust,” which starts when people constructively engage in exploring their differences and commonalities that can illuminate pragmatic pathways forward.
Interested in more? Reach out to info@future500.org
Future 500 is a non-profit consultancy that builds trust between companies, advocates, investors, and philanthropists to advance business as a force for good. We specialize in stakeholder engagement, sustainability strategy, and responsible communication. From stakeholder mapping to materiality assessments, partnership development to activist engagement, target setting to CSR reporting strategy, we empower our partners with the skills and relationships needed to systemically tackle today's most pressing environmental, social, and governance (ESG) challenges.
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