Proponents have filed at least 527 shareholder resolutions on environmental, social and related sustainable governance issues for the 2024 proxy season. This is down by only a few from 536 last year at the same time. It still seems possible the total will reach 630, as it did in both 2023 and 2022.
Support levels have fallen substantially on average in the last two years, largely because the biggest asset managers have stopped supporting as many proposals. Some of the chill clearly comes from attacks on the use of investment strategies that consider social and environmental matters in business, underscored by related litigation that is testing out novel legal theories that could upend shareholder rights and decades of investor engagement. Some also comes from the types of resolutions filed, as well as the context of a surging U.S. economy and fallout from global conflicts that has pushed energy prices higher. Proposals that favor changes that would strengthen corporate approaches to societal responsibility continued to drop but are still earning far more than those that oppose such efforts by a wide margin; the pro-ESG average fell to 21.5 percent last year, down from an apex of 33.3 percent in 2021. The relatively small number of anti-ESG proposals gained no traction, though, and last year saw their already low average fall to only 2.5 percent.
The number and proportion of voted proposals rose in 2022-23, even as fewer were omitted given a policy shift at the Securities and Exchange Commission (SEC) in late 2021. Companies last year responded to the new SEC approach by lodging fewer challenges, but in 2024 their efforts to exclude proposals have surged back to earlier levels. There have been just seven omissions so far and 94 challenges remain to be decided—compared with 12 omitted and 76 to which SEC staff had not responded in mid-February 2023.
Information available so far in 2024 suggests that the shift to fewer withdrawals may continue. Further, this report counts about 70 proposals that are not described in detail, more than double the figure from 2023, as participants keep their engagements out of the public eye. Right now a total of 479 are slated for votes, up from 450 at the same point last year. The final will be lower as proponents withdraw and some are omitted.1
Key shifts for 2024: Some of the most notable new proposals ask companies about their use of artificial intelligence (AI), while a few also reference new recommendations to protect biodiversity and nature. Otherwise, the broad strokes of previous years are similar—with about one-third on environmental topics; about 30 percent on diversity, decent work and human rights; and 17 percent on corporate political influence. Anti-ESG proposals make up 8 percent of the total but this is likely to increase because these proponents do not share their proposals before voting begins in the spring. The health slice is smaller, since last year’s surge in proposals about reproductive rights has diminished (5 percent for all on health). A few more about sustainable investing practices address proxy voting this year (8 percent of the total). A more detailed look at topic trends appears below on p. 17, while this year’s breakdown by topic appears on the pie chart.
Regulation: On March 5 the SEC released its long-awaited climate disclosure rule, which disappointed shareholders as it excluded scope 3 emissions and put materiality thresholds on scopes 1 and 2. The rule set a new standard for material disclosure on par with financial disclosures as they must be accurate, verified and in a standardized format for comparability. Still stalled is a final rule on further amendments to SEC rules—proposed in 2022—about whether a shareholder proposal has been implemented, if it can be resubmitted and if it is duplicative.
Litigation: There has been no ruling on the lawsuit filed in 2021 by the Interfaith Center on Corporate Responsibility (ICCR), As You Sow and James McRitchie; multiple postponements mean any decision will not affect this proxy season. Elsewhere, cases from right-wing groups that include the National Center for Public Policy Research, the dominant anti-ESG filer, are arguing that the entire shareholder proposal process is illegitimate and should be stopped. These cases also will not affect the current proxy season but may have some impact later on. In another novel move, ExxonMobil sued investors who filed a climate change proposal. The proponents withdrew their resolution but Exxon is continuing its litigation in an effort to prevent future shareholder resolutions. The investors have requested that the case be dismissed.
1. Figures in this report exclude corporate governance topics not followed by Si2, which have receded in numbers for several years and generally get higher levels of support; anti-ESG groups also filed a small number of such proposals and earn slightly more for them than on environmental and social issues. Law firms tracking all proposals estimated last year there were about another 250 governance proposals filed beyond what Si2 tracks.