Support for shareholder proposals relating to environmental and social issues at U.S companies have fallen sharply this year according to law firm Simpson Thacher.
In a report, ‘ESG in Mid-2023: Making Sense of the Moment’, Simpson Thacher said that in 2021 a record 36 shareholder proposals relating to environmental and social issues received majority support.
However, while environmental and social issues continue to attract shareholder proposals, support for these measures declined demonstrably in 2023 according to the report.
“Support for environmental proposals in particular fell steeply from 42% in 2021 to just 22% in 2023,” added Simpson Thacher. “Just two of these proposals received majority support, compared to nine in each of 2022 and 2021.”
The law firm argued that although the figures indicate a drop in shareholder support for environmental and social issues, they also reflect shifts in the types of proposals being submitted, their proponents and voting patterns, and the broader investor sentiment.
There is an increased diversity of proposals and proponents; more specific, bespoke and prescriptive proposals as well as refined voting guidelines.
“While this year’s results certainly indicate a shift in how ESG factors into proxy season, it’s also important to note that many large institutional shareholders continue to reiterate their focus on creating and supporting long-term sustainable business practices, as well as strong support for companies’ ESG-related disclosure,” said the report.
It added, “And while “ESG” isn’t going anywhere just yet, companies are wise to consider a “GES” formation, putting a primary focus on the governance practices supporting companies’ strategy deployment, risk assessments, commitments and decision-making.”
©Markets Media Europe 2023
