Shareholder Engagement: 5 Key Themes For 2025

January 28th, 2025


Shareholder engagement continues to drive and shape the corporate governance landscape as shareholders expect companies to be held accountable and address critical issues.

In 2025, the pressure on boards to meet evolving shareholder expectations is greater than ever, with Trump regaining office and shareholders evolving tactics such as the increasing frequency of ‘vote-no’ campaigns.

Notable lawsuits include ExxonMobil’s lawsuit against Arjuna Capital and Follow This over a climate resolution deemed as being part of an “extreme agenda” and TotalEnergies SE excluding a proposal from their 2024 agenda, both illustrating the challenging landscape for shareholder engagement.

This article delves into topics that are expected to be prominent in 2025 as shareholders continue to demand accountability and push companies to navigate a complex ESG environment while preparing for a future shaped by shareholder engagement.

Diversity and Climate Policies

The Trump administration’s return has once again upended the dynamics of shareholder engagement, with Trump announcing significant changes such as the United States’ withdrawal from the Paris Agreement and rolling back Diversity, Equity and Inclusion (DEI) initiatives. These echo his actions in 2020 where we witnessed boosted support for ESG proposals with institutional investors showing a greater willingness to hold companies accountable with several climate resolutions receiving a majority vote.

While several large US companies have already scaled back their DEI initiatives, including Amazon, Meta and McDonald’s, several other companies like Apple, Microsoft and Costco have defended their DEI initiatives, which shows a divergence in views and highlights the polarisation within corporate America.

In contrast, countries in Europe have introduced measures promoting board gender balance in response to EU regulation, further complicating the corporate landscape for global investors.

Additionally, although support for environmental and social issues stalled in 2024, there was an increase in support for governance proposals, with several seeing a majority vote. This evolving and polarised environment is reflected in the shareholder proposals filed on diversity, with proposals filed both on rolling back DEI initiatives and providing greater transparency and reporting on implementation of DEI initiatives.

‘Vote No’ Campaigns

Amidst this backdrop one of the most stand-out movements in shareholder engagement is ‘Vote No’ campaigns, where investors file solicitations to other shareholders to vote against (or withhold their votes) from directors or other agenda items such as say on pay. The key point with a ‘Vote No’ campaign is that complete success does not need to be obtained to achieve results.

In general, the support for both directors and say on pay votes is typically over 90% and thus if support levels fall to the 60-80% range, shareholder dissatisfaction should be echoed throughout the company.

Furthermore, in contrast to a shareholder proposal, a ‘Vote No’ campaign can be resubmitted regardless of previous support levels, making it a powerful tool for shareholder engagement.

The Shareholder Commons has filed a notice of exempt solicitation at Walgreens Boots calling on shareholders to vote against its executive chair Stefano Pessina due to concerns over the Company’s approach to employee pay at its upcoming AGM.

We have also seen them utilised in Australia during 2024 at Santos, Woodside Energy & Whitehaven Coal to raise concerns over climate strategy. Keith Spence (Chairman) was targeted at Santos, Richard Goyder (Chairman) was targeted at Woodside Energy and at Whitehaven their Remuneration report was recommended to be voted against.

The table below shows how the vote no campaigns had the effect of pushing down favourable votes in comparison to years when no vote campaign was presented.

 

Source: Minerva Analytics Ltd

Executive Remuneration

Executive remuneration will continue as a key theme in 2025, with shareholders increasing scrutiny on executive pay as they demand greater transparency and alignment with company performance.

Trump’s regaining of office has seen a rollback in executive compensation regulations, including the removal of stricter transparency rules and limits on executive perks, therefore demonstrating reduced regulatory scrutiny, this is expected to intensify shareholder stewardship efforts.

Investors are pushing for more say-on-pay votes and are voting less favourably on excessive remuneration packages. Amazon is a recent example of shareholder backlash regarding executive remuneration practices; shareholders are aiming to ensure that executive pay is tied to long-term performance and some shareholders are also pushing for the integration of ESG performance metrics.

This trend is set to continue in 2025 as shareholders become increasingly more vocal and continue to demand accountability from corporate boards globally.

The Growing Demand for Oversight of Artificial Intelligence

As Artificial Intelligence continues to rapidly develop, we can continue to expect increased shareholder engagement related to AI. While companies see an opportunity to gain efficiency and drive growth, shareholders are pushing for better disclosures of governance processes and thus greater transparency, accountability, and risk mitigation.

In 2024 we saw a wide range of companies being targeted by AI proposals; while initially technology companies such as Alphabet, Apple and Meta were targeted, we have seen AI proposals venture into different sectors such as Restaurants (Chipotle) and Entertainment (Paramount). This would suggest that we might see AI continue to reach broader sectors across the US.

Source: Minerva Analytics Ltd

Global Value Chains and Accountability

Global value chains will continue to be subject to shareholder engagement with the complexities of this topic becoming a recent focal point for shareholders as they are becoming increasingly vigilant in the companies that they invest in.

Investors are advocating for greater oversight and corporate responsibility when dealing with company value chains. This includes addressing human rights, ensuring ethical labour practices and greater disclosure of sourcing and manufacturing processes.

Shareholder proposals on labour rights have gained traction, with Starbucks receiving a majority support on a labour rights proposal previously in 2023. Apple and Nike are the most significant companies of note who have come under scrutiny in recent years to improve their operations.

The issue also branched out into Europe as Hennes & Mauritz AB (H&M) were subject to criticism from shareholders regarding their labour practices, environmental impact, and the overall sustainability of their operations.

Shareholder engagement is set to remain a powerful force during 2025 in shaping corporate governance. From ‘Vote No’ campaigns to the array of ESG concerns, the interconnected demands of investors are driving companies to adapt and innovate.

Minerva believes a board that works proactively to address these challenges will not only meet shareholder expectations but allow the company the best opportunity as they position themselves for long-term success.

Author: Daniel Kehoe

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Last Updated: 28 January 2025