Environmental concerns continue to be top of mind for US shareholders in 2024, with more filed resolutions focused on climate change than any other topic, a new tally by Proxy Preview showed.
The annual Proxy Preview is a collaboration by the advocacy groups As You Sow, Proxy Impact and the Sustainable Investments Institute (Si2), and it tracks investor efforts to influence US company boards and strategies.
About 550 shareholder resolutions have been proposed in 2024, report co-author Heidi Welsh said March 14, but that number could reach the 630 filed each of the previous two years. At the same time, the analysis found more companies are challenging shareholder resolutions.
Shareholder resolutions are nonbinding recommendations to a public corporation's board of directors to advocate for changes in board policy. They are voted upon at a company's annual meeting and through a proxy vote.
The data shows that climate-focused proposals in 2024 were down 10% from the same time last year but still topped the list with 106 proposals filed as of mid-February. An example is a resolution by As You Sow that asks Valero Energy Corp. to ensure it will not use carbon offsets to reach its climate goals. Many other climate resolutions stretch across economic sectors and industries.
The authors of the report said fewer climate resolutions might signify more agreement by investors and companies about how to address risks in a rapidly warming world.
"For some people, it seems counterintuitive, but a decline in resolutions can be a good thing," co-author Michael Passoff, founder and CEO of Proxy Impact, said during a March 14 press briefing about the report. "When you're engaged in companies, you want it to work out well, and you don't even want to have to file a resolution. A decline can mean that there is good communication."
Another top priority for shareholders this season is corporate lobbying and political influence. Shareholder proposals under those labels seek reports on state and federal lobbying, payments to trade associations, and any support of tax-exempt organizations that write model legislation.
New trends for 2024 detailed by the report include several new proposals asking companies about their use and reliance on artificial intelligence. SEC staff in January turned down requests by Apple Inc. and Walt Disney Co. for permission to exclude AI-related shareholder proposals. The Apple resolution garnered 37.5% of votes at the company's annual shareholder day in late February.
"That's a pretty high vote for a first-time issue and suggests that IT companies are going to need to give investors a bit more information about how they're handling these issues," said Welsh, executive director of Si2 and manager of the Proxy Preview database.
More investor activity from opposite sides
The 2024 edition of Proxy Preview comes as companies and their shareholders face a continued political backlash against environmental, social and governance policies.
Most recently, Exxon Mobil Corp. decided to sue investors Follow This and Arjuna Capital LLC over their resolution asking the oil company to speed up emission reductions and include end-user emissions in its targets. The groups withdrew their resolution, but ExxonMobil has asked a federal district court in Texas to still hear the case.
ESG critics are increasingly using their influence as shareholders to push companies to abolish social and environmental policies, the Proxy Preview researchers said. In all, 44 anti-ESG proposals had been filed as of mid-February at companies such as Chevron Corp. and ExxonMobil, as well as Bank of America Corp. and other large financial firms, the data showed. Of those proposals, six were no longer in play after SEC staff challenged them, but Welsh expects more anti-ESG proposals to be filed.
The National Center for Public Policy Research, a conservative think tank behind many of the anti-ESG proposals, is focusing on corporate diversity, equity and inclusion initiatives it says discriminate against "non-diverse" employees. This was the focus of a center resolution at Starbucks' March 13 shareholder meeting, a proposal the coffee company opposed.
"This anti-ESG crusade is a well-funded and centrally orchestrated attempt to maintain the status quo against prevailing market forces," said Andrew Behar, CEO of As You Sow. "Despite this, shareholder advocacy and sustainability investing are resilient and growing."
Overall, shareholder engagement — and investor activism campaigns — have increased over the past decade. The number of proposals reaching a vote also rose in the past couple of years after the SEC rescinded a Trump administration policy that limited the scope of allowable shareholder resolutions and could hit a record in 2024, the Proxy Preview report said.
