Sustainability Oversight and Disclosure
After a three-year dip, the number of sustainability reporting resolutions has been on the increase; 22 are now pending and one has been withdrawn. While rising again, the number of reporting requests has fallen from a high of 45 in 2014. Sustainability reporting in corporate America has become increasingly common, leading proponents to file less generalized proposals. At the same time, a big drop in agreements between proponents and companies began in 2015, yielding far fewer agreements and more votes each year; previously, two-thirds of the reporting proposals filed ended up withdrawn after agreements. Part of the reason for the change seems to be a greater diversity of requests, but in general accords about reporting seem to be harder to reach. (See top chart; 2018 figures will change.)
As the number of reporting proposals has fallen, the tally of those asking for links to executive pay has grown. (Bottom graph.) This year marks the biggest number of such proposals to date.
The issues in this area encompass proxy voting. Given their large blocks of votes, shareholder proponents are keen to recruit large mutual funds to support their proposals. The decision last year by the multi-trillion dollar mutual funds BlackRock, Vanguard, State Street and Fidelity to support climate change disclosure resolutions marked a sea change in the vote tallies, a thrilling development for many longtime proponents who were pleased with all the high votes. BlackRock’s new approach to voting on ESG issues, which articulates support for corporate action on board diversity, climate risk disclosure and human capital management, may further alter the landscape in 2018. Three resolutions to other mutual fund companies seek reports on their proxy voting practices.