Proxy Preview 2020, released t by As You Sow, the Sustainable Investments Institute, and Proxy Impact, offers a comprehensive look at more than 400 shareholder resolutions filed on environmental, social, and sustainable governance (ESG) issues. Out of 429 filings, more than 300 are headed for votes at corporate annual meetings this spring.
While the SEC is poised to restrict future proposals with new rules expected this spring, investors have doubled down on requests for more oversight and transparency about corporate spending on political influence, climate change, and fair treatment for women on boards and in the workplace. Two-thirds of the proposals address these issues. Shareholder proponents also want action on human rights and links between executive pay and performance on a wide range of environmental and social issues.
“The SEC is about to clamp down on shareholder proposals that ask companies to explain how they will respond to some of their biggest challenges,” Heidi Welsh, executive director of the Sustainable Investments Institute and co-author of Proxy Preview 2020, said. “Companies who don’t want to publicly air these matters on their proxy ballots may get what they want in the rule this spring, but curtailing shareholder rights doesn’t mean these risks will evaporate. The ultimate outcome will depend on litigation and the 2020 election results.”
The jury is still out on whether major mutual funds will vote for more environmental and social policy shareholder resolutions, which largely ask for more disclosure. When funds vote in favor, majority votes result, and most companies act. In the last two years, this has happened with resolutions about diversity, the opioid epidemic, corporate political influence spending, and gun control—with 20 unprecedented majority victories.
“Fifty years of shareholder advocacy for employees, communities, supply chain, customers, and shareholders have helped to prompt the World Economic Forum and Business Roundtable to finally adopt and endorse the idea of stakeholder capitalism,” Andrew Behar, CEO of As You Sow, said. “But the 2020 proxy season will test if investors and companies will help define a new economic paradigm or if these endorsements are just empty words.”
Average support for shareholder resolutions continues to climb, while shareholder proponents and companies are reaching even more agreements.
“Shareholder resolutions continue to move companies to action” Michael Passoff, CEO of Proxy Impact and co-author of Proxy Preview 2020, said. “In the last few months alone Starbucks agreed to shift from single-use packaging to reusable packaging. It also agreed to provide unadjusted pay gap data which will help raise the bar on pay equity disclosure. Verizon agreed to conduct a child risk assessment to help protect kids from sexual predators online, and it also agreed to increase its renewable energy goal from 2 percent to 50 percent.