ESG shareholder resolutions are still growing in number but, for the first time, the growth is primarily driven by ‘anti-ESG’ proponents, according to Morningstar.
This year has been an interesting one for ESG votes, according to Morningstar Sustainalytics’ director of stewardship research and policy, Lindsey Stewart.
With the 2024 proxy season now officially over, Stewart assessed some of the major trends which emerged over the last few months.
Governance proposals gained greater support, Stewart noted, but the environmental and social (E&S) proposals proved more complicated.
Overall support for ESG proposals stayed flat in 2024 at 23%, with a marked rise in anti-ESG resolutions, along with growing tensions among asset owners and investors on how to tackle the climate transition and governance plans of oil and gas majors, as reported by IPE.
According to the data, Lindsey said there has been a rebound in support for governance-focused proposals, from 30% in the 2023 proxy year to 35% this year. In addition, resolutions seeking to bolster shareholder rights enjoyed particular success.
Furthermore, the decline in shareholder support for environmental and social resolutions continued in 2024, but appears to be slowing, Stewart said. The average support for E&S resolutions fell to 16% this year from 19% in the 2023 proxy year.
“Underlying shareholder backing for key E&S resolutions – those supported by at least 40% of a company’s independent shareholders – remained at 2023 levels despite the continuing broader decline,” Stewart said.
Notably, large asset managers appear to have continued withdrawing support for E&S proposals in 2024, driving growth in a cohort of ‘near miss’ resolutions with between 30% and 40% independent shareholder support, he said.
“Continued growth in the overall volume of resolutions with falling average support is likely to prompt further questions about both the quality of proposals being filed, as well as the future of the entire shareholder resolution process, from both institutional investors and companies,” Stewart concluded.
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