Below are key takeaways from ISS’ recently released 2023 Proxy Season Preview – United States -Environmental & Social Issues. 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.
- ESG-related regulation is increasing. Several federal regulations have been proposed and/or are pending that, if enacted, will impact the kinds of information that companies are required or expected to disclose regarding environmental and social issues.
- Anti-ESG sentiment is on the rise. An increasing number of state-level laws and bills are aimed at restricting “ESG investing”. A growing number of shareholder proposals filed in 2023 and Vote No campaigns question the value of corporate responsibility initiatives, particularly those related to climate and DEI (diversity, equity and inclusion).
- Climate change continues to be the top E&S issue for shareholder proposals. Most of the climate proposals filed ask companies to report on or to adopt greenhouse gas emissions targets in line with the Paris Agreement goal. In many cases the targets requested include Scope 3 emissions targets.
- Focus on diversity, equity and inclusion (DEI) remains strong. An increasing number of shareholder proposals this year ask companies to publish quantitative data related to workforce composition, recruitment, retention, and promotion rates by gender, race, and ethnicity in order to be able to assess and compare the effectiveness of DEI programs.
- Requests for increased lobbying and political spending disclosures continue. In addition to the more commonly seen proposals requesting increased disclosure of lobbying and political contributions, a larger number of proposals have been filed this year asking 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.
- Proposals on the topic of freedom of association and collective bargaining increase Investor concerns over charges of unfair labor practices and anti-unionization efforts at some companies have led to a spike in proposals either asking companies to adopt and disclose policies or to commission a third-party assessment of a company’s commitment to collective bargaining rights.
- Number of proposals on the topic of reproductive healthcare and rights increase. Someproposals ask for disclosure on the risks of restrictive reproductive healthcare legislation on a company’s workforce and operations. New proposal types focus on data privacy, insurance healthcare coverage, a patient’s right to access abortions in medical emergencies, and maternal healthcare services for employees.
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By: Hailey Knowles, Michael Ellis, Kathy Belyeu, Enver Fitch
