Below are key takeaways from ISS’ recently released 2022 United States Environmental & Social Issues Proxy Season Preview. 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.
- The number of environmental and social proposals is increasing. The market is expected to see a record number of shareholder proposals on environmental and social issues filed in 2022 as the median support rate for E&S-related shareholder proposals has increased in recent years and the SEC has indicated that it will be less likely to exclude shareholder proposals on “ordinary business” grounds.
- Climate change concerns are moving beyond shareholder proposals. In addition to climate-related shareholder proposals, climate concerns are expected to be reflected this year in votes on directors, some voluntary management-presented votes on climate transition plans, and some compensation plans.
- The short record in 2022 to date already indicates strong shareholder support for some E&S proposals. With only 21 environmental and social-related shareholder proposals voted on at ten annual shareholder meetings so far in 2022, six proposals have already received majority support.
- Proposals requesting independent racial equity and civil rights audits increase. In addition to requests for racial equity audits, shareholder proposals have been filed asking for independent audits of civil rights and non-discrimination practices, of diversity, equity and inclusion practices, of the impact of low-carbon emissions scenarios, of health and safety practices, of working conditions, of environmental/social justice practices, and other topics.
- Labor market upheaval causing shareholders to raise human capital management concerns. Shareholder proponents are asking companies to consider risks related to increased labor market pressure, to consider higher pay and benefits, to improve disclosure related to non-disclosure agreements and mandatory arbitration clauses, and other topics related to employee treatment.
- Continued push for increased lobbying and political spending disclosures. In addition to more commonly seen proposals requesting increased disclosure of lobbying and political contributions, the 2022 season will also see an increase in requests for companies to analyze and report on any inconsistencies between their stated corporate positions and the lobbying activities of organizations they are members of or work with, such as trade associations.
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By Kathy Belyeu, Enver Fitch