Proxy preview: E&S proposals to rise in 2023
March 21, 2023
Despite average support for environmental and social shareholder proposals declining in FTSE 350 copmany AGMs in 2022, Minerva predicts that there may be a return to strength in 2023.
Our findings, detailed in our 2023 proxy season preview, reflect the findings of a new report by thinktank The Conference Board ESG Center, which revealed 34% of E&S proposals in Russel 3000 companies were withdrawn in 2022, despite record support for E&S in 2021’s proxy season.
The similarities in these findings is telling of the global state of ESG, considering Minerva reviewed trends in UK FTSE 350 companies whilst the ESG Center analysed US Russell 3000 companies for 2021 and 2022.
The high withdrawal levels in the Russel 3000 caused the average support for shareholder proposals to decrease from 35% in 2021 to 31% in 2022. In the FTSE 350, a similar decrease was seen.
However, the report stated the reduced support for E&S proposals was not a sign of ESG backlash. Rather, the report expects a growing number of proposals for E&S topics in the 2023 proxy season.
Additionally, many proposals were low quality or less relevant to a company’s business, which contributed to a decline in support. Minerva has also found that shareholders of UK listed FTSE350 companies are likely to be more scrutinous of company goals year-on-year.
In the US, the increase in anti-ESG proposals also resulted in high withdrawal levels. Many of these proposals offered resolutions similar to pro-ESG proposals but involved different motivations and consequences.
However, there were positives between 2021 and 2022. Even though fewer environmental proposals were passed in the Russel 3000 in 2022, the number of proposals filed increased sharply from 85 in 2021 to 146 in 2022.
The rise in environmental proposals was driven by climate-related proposals, which dominated the 2022 proxy season in terms of volumes. A similar pattern was found by Minerva in the FTSE 350, with environmental resolutions increasing from 16 in 2021 to 19 in 2022.
The number of climate-related proposals filed in the Russel 3000 increased by 70%, from 60 in 2021 to 102 in 2022. Though the same magnitude of increase was not seen in the UK’s FTSE 350, the smaller increase still indicates a trend towards greater incidence of climate-related proposals.
The Conference Board expects this trend to continue in the 2023 proxy season, a view that is supported by Minerva’s latest report.
Likewise, the ‘Minerva Briefing: Proxy Season Preview’ forecasts an increase of proposals filed in climate targets in 2023, as climate change became an important focal point of many proposals in 2022.
The study also expects climate activism to be expressed through votes on director elections as decision-makers take accountability for climate-related issues.
Read more of the Minerva Briefing to find out what other trends we are likely to see in the 2023 proxy season. You can also watch our webinar covering the key trends of the 2022 proxy season, and a look ahead to the 2023 season for more info:
Last Updated: 21 March 2023