Below are key takeaways from ISS’ recently released United States Environmental & Social Issues 2021 Proxy Season Review. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
- A record number of Environmental & Social (E&S)-related shareholder proposals have been filed so far this year. Increased desire among many investors for integration of environmental and social disclosures and targets leads to the largest number ever receiving majority support.
- Shareholder proponents continued the focus on racial injustice and inequality sparked by the events of last year. A new type of proposal was filed at several companies asking them to overseeand report on a third-party racial justice and/or civil rights audit to analyze the impacts of the company’s business practices on non-white stakeholders and communities of color.
- Some proponents increased pressure on boards to take steps to limit companies’ climate change risk and impact. There were several Vote No campaigns against directors at certain high impact companies.
- A new type of shareholder proposal – requesting Say on Climate votes – made it on the ballot at four companies this year in the U.S. They garnered a median support level of 35.5 percent, relatively high for first-time shareholder proposals.
- Two management Say on Climate proposals were also seen this year at US companies, giving shareholders advisory votes. Both received around 99 percent shareholder support.
- Human capital issues remain a key focus area, particularly in light of COVID-19. This was the largest category of E&S-related shareholder proposals, with 133 proposals filed for the 2021 season, up from 77 for the 2020 season.
- Shareholder proposals on workforce diversity and inclusion continued to increase in numbers and in levels of support. At the same time board diversity proposal numbers continued to decline. Based on feedback from clients, the decline in the number of shareholder proposals is not due to a lack of support for the issue but because the issue is increasingly seen as a board accountability issue.
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By Enver Fitch, Kathy Belyeu