November 25, 2014
Record High Support for ESG Resolutions by Shareowners in 2014
by Robert Kropp
More resolutions addressing environmental, social, and corporate governance issues were filed by
shareowners in 2014 than ever before, and proxy voting results thus far indicate record support for
them as well.
The 2014 proxy season is not over quite yet, but a report on results thus far, authored by Heidi
Welsh of the Sustainable Investment Institute
(Si2), reveals that many more shareowners are incorporating environmental, social, and
corporate governance (ESG) considerations when voting their proxy ballots.
This proxy season saw a record number
of ESG resolutions filed; the 454 resolutions filed this year were far more than ever before. Also,
shareowner support for the resolutions is at an all-time high as well: the average is 21.7% for the
200 resolutions voted on at the time of the report's publication. There have been five majority
votes thus far this year, and 22 resolutions have gained at least 40% support.
nonprofit ESG research organization, collaborates with A
s You Sow on the publication of the latter's annual Proxy Preview.
Supreme Court's Citizens United decision in 2010, far more money has poured into the electoral
system than ever before, raising serious questions about the health of the nation's democracy.
In the continuing absence of a Securities and Exchange Commission directive mandating
disclosure of corporate political spending, sustainable investors and other advocates have
responded with record numbers of resolutions. Investors allied with the Center for Political Accountability (CPA) filed
49 resolutions requesting disclosure, one of which received a majority vote.
Walden Asset Management and the American
Federation of State, Municipal and County Employees (AFSCME) coordinated another 49 resolutions
calling for corporate disclosure of lobbying expenditures. Of the 38 votes recorded at the time of
the report's publication, three resulted in majority support. Overall, 16 of the 22 resolutions
that have gained at least 40% support address corporate political and lobbying expenditures.
While the unchecked flow of money into elections threatens the fabric of the nationís
democratic system, unchecked climate change threatens civilization at the global level. Given that
sustainable investors and environmental advocates such as As You Sow have been addressing climate
change with corporations for years, itís somewhat surprising to read in Si2ís report that the
number of resolutions filed in 2014 actually increased quite dramatically: 72 were filed this year,
29 more than in 2013.
On average, almost a quarter of shareowner votes supported a number
of climate-related measures: 22 companies were asked to establish greenhouse gas (GHG) emissions
reduction goals, while other resolutions addressed methane emissions.
development in the environmental area this proxy season was a resolution filed with ExxonMobil,
requesting that the oil and gas giant report on the financial implications of stranded assets. As
You Sow withdrew the resolution when the company agreed to publish such a report, but it said
little more than that it plans to burn all the fossil fuel reserves on its books.
about a quarter of shareowners supported resolutions filed with PNC Financial and Bank of America,
requesting that the financial institutions report on GHG emissions in their lending portfolios.
Human rights was also a significant issue for shareowners this season, as 14 resolutions
were filed requesting that companies conduct human rights risk assessments. Another five
resolutions, filed by members of the Interfaith
Center on Corporate Responsibility (ICCR), requested that companies in the travel and tourism
industries adopt policies to prevent human trafficking; all five resolutions were withdrawn
following signs of successful engagement.
The quality of corporate governance has always
been a major issue for shareowners at annual general meetings, and 2014 was no different in that
regard. Twenty-three resolutions addressing board diversity were filed by investors allied with the
Thirty Percent Coalition. Sixteen
of the resolutions were withdrawn following engagement, while the three that had come to a vote
thus far received as much as 40% support.
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