Week of 12 July 2021
What are the biggest ESG trends of the 2021 proxy voting season?
Our key takeaway: No surprises here—climate change, racial equality and workers’ rights are top of mind for investors in the 2021 proxy season. What’s new? Resolutions that reveal interlinkages between complex issues like economic, environmental and racial justice, a just climate transition, decent work and corporate transparency.
The 2021 Proxy Preview, from Proxy Impact, Sustainable Investments Institute (Si2) and As You Sow, compiles and analyses trends in U.S. shareholder resolutions filed on environmental, social and governance (ESG) issues. The preview reports that at least 435 resolutions have been filed for the 2021 proxy season as of February 2021. What do these numbers reveal about where investors are focusing now?
- 2021 resolutions are building on issues that exploded during the social, economic and political upheaval of 2020. The events of 2020 “prompted a slew of new shareholder proposals investors will consider in 2021. New angles are most apparent in the big increase in resolutions about racial justice and equal opportunity, but proponents also are raising fresh ideas about worker safety, climate transition planning and lobbying.” For example, in response to the Black Lives Matter Movement, shareholder proponents are “doubling down on shareholder resolutions asking for disclosure of diversity in the workplace and in executive positions. They are seeking more robust efforts to hire a diverse workforce, and they want more information on how companies are managing their workforce programs and rooting out racism. The number of proposals doubled to 68, more than have ever been filed before.” More resolutions are also being filed on issues like CEO-worker pay differentials and worker benefits in the context of decent work and the pandemic.
- Climate change tops the charts as the most significant ESG issue of the 2021 season. Amidst a myriad of environmental topics—ranging from deforestation and waste, to plastics, pesticides and water use—climate change is “the dominant environmental topic” among 91 total environmental resolutions filed. And climate themes showed up in other places as well: “Climate-related concerns lay beneath the surface of many other proposals, particularly those about sustainable governance,” including disclosure and lobbying. The authors believe that whether these resolutions move forward will be shaped by U.S. policy and regulatory shifts since 2020: “With the Biden administration promising aggressive action to address climate change, companies and their investors face a completely different public policy context than they have over the last four years. … Just how companies will position themselves as they face the Biden administration’s climate plans is on the minds of many investor activists, and explains their focus on [corporate] lobbying.”
- Resolutions on human rights are taking a wider lens than in previous years. There are 46 proposals related to human rights this year, and among these are “a panoply of new proposals about racism both at work and more generally. The focus is on systemic racism and the extent to which companies can and should combat it.” These join “older proposals about supply chain risks like child labor” and combatting hate speech online. Many human rights-related resolutions “tread familiar ground” by focusing on conducting assessments and disclosure of human rights risks.
For more, see Proxy Impact, Sustainable Investments Institute (Si2) and As You Sow, 2021 Proxy Preview (July 2021)
Andrew Behar, CEO, As You Sow