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Anti-ESG proposals have also jumped, and the first vote this year was for one at Apple that called for reporting on the “risks” of the company’s diversity and inclusion programs. PHOTO: JOHN G MABANGLO/SHUTTERSTOCK

Proposals on social issues have waned slightly but continue to be the most popular while climate action ones are on the rise. By Dieter Holger from The Wall Street Journal • Reposted: March 27, 2023

U.S. companies are facing fewer shareholder proposals on social issues this year but more calls for climate action. Anti-ESG ones are increasing, too.

For annual general meetings taking place in the first six months of the year, shareholders across all U.S. publicly traded companies filed a total of 538 proposals related to environmental, social and sustainability governance issues, according to the Sustainable Investments Institute, a Washington-based nonprofit that tracks such votes. Last year, there were 577 filings over the same period.  

Proposals focused on social issues were again the most popular this year, mentioned in 338 of the filings, down more than 9% from 373 last year. Environmental issues were at the heart of 162 proposals, up slightly from 2022’s comparable tally of 155. Included in the grand total were 48 so-called anti-ESG proposals focused on the risk of ESG-promoting policies, up from 27 in the same period last year. 

Historically proposals sought more transparency, better disclosure or asked for companies to set goals, said Peter Reali, managing director and member of the sustainable investments team at fund manager Nuveen LLC. Now, many are calling for a change in behavior or impact, he said.

While the votes on proposals aren’t binding, they can create pressure for companies to change, to take a position on hot-button issues and can also express a lack of investor confidence in board members. However, Heidi Welsh, director of the Sustainable Investments Institute, cautioned that “it’s far too soon to draw any conclusions about support levels since we only have seen about half a dozen votes.” Sustainability ProposalsFilings are trending down this year compared with 2022, but more are expected to surfaceSource: Sustainable Investments InstituteNote: Proposals filed by March 20 for U.S. public companies with annual general meetings in the first six months of the​year.EnvironmentalSocialSustainability Governance2014’15’200100200300400500600

There are 298 proposals for companies to take more action on social issues, slightly down from 332 in 2022. Again this year, around a third of those concerned politics, including requests to set up board oversight or to report on a company’s lobbying, election spending or trade associations. Last year, politically-focused proposals won an average of 32% support, with only five—including at Twitter Inc., Netflix Inc. and insurer Travelers Companies Inc. —achieving majority support. 

There are also 20 pay equity proposals this year, down from 33 in 2022. These typically ask companies to audit or report on gender-and-racial pay differences. Abortion has also emerged as a flashpoint with 22 reproductive health proposals this year, up from four last year.

Environmental action was the second most popular area of shareholder focus. So far, there are 160 pro-environment proposals this year, up from 154 in 2022. Most environmental proposals ask companies to adopt or report on Paris-aligned climate targets, while a smaller number ask investors, insurers and banks to report on, limit or cease their financing of fossil fuels. 

Shareholders voted on a record number of pro-climate proposals last year, but their support was lukewarm for more ambitious goals such as ending fossil-fuel financing. 

Support has waned slightly since 2021 when proposals calling for emission-reduction targets garnered record backing. Investors have also been more hesitant to support proposals that specifically lay out how a company should meet a climate target, said Mr. Reali: “It’s one thing to ask companies to set goals and targets, it’s another thing to tell companies how to achieve those goals and targets.” 

Evidence of the rise of the anti-ESG movement in the U.S. can also be seen. The 48 anti-ESG filings to date mostly ask companies to report on the “risks” of corporate plans for improving diversity and inclusion in and outside the company. Only five concerned the environment.

Ms. Welsh expects more anti-ESG proposals this season. However, last year, most of these types of proposals received less than 5% support, the threshold necessary to refile it again in the coming year. This year’s first anti-ESG vote—asking Apple Inc. to report on the “risks” of its diversity and inclusion programs—received 1.4% support.

The proposal tally will change over the AGM season, running from January to September but with most meetings happening between April and June. Some proxy statements will include new proposals. Companies will avoid votes when shareholders withdraw some current proposals, usually after they reach an agreement with the company on an issue. Last year, 273 proposals were withdrawn before they could be voted on during the AGMs in the first half of 2022. The comparable figure this year is 120, so far. 

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