Climate & Voting – A Look-Back Over 2022-2023 Global Trends

Below are key takeaways from ISS’ recently released Climate & Voting – A Look-Back Over 2022-2023 Global Trends. 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. If you are not a subscriber, you can download a copy of the full report here.

NOTE: The recently published Global Climate FAQ for the ISS Benchmark Policy can be accessed here.

Since 2021, the number of climate-related proposals has significantly increased year on year and is no longer relegated only to shareholder proposals.

• Over 300 climate-related management and shareholder proposals were proposed globally in 2023.
• The practice of shareholders filing climate-related agenda items remains concentrated in a limited number of markets (mainly US) and sectors (energy, financial, utility, and industrial).
• The most common topics are GHG emissions reduction targets, climate transition plans, and to a lesser extent, climate risk analysis.
• In 2022 and 2023, shareholder proposals mainly focused on requests for GHG reduction emissions targets, and disclosure of how transition plans are aligned with the Paris Agreement’s goals to limit climate change.
• While the energy sector has received the most climate-related shareholder proposals cumulatively since 2016, the financial sector took the lead role as the most targeted sector in 2022-2023. Shareholder proposals often asked financial institutions to phase out new fossil fuel projects or to disclose or adopt a climate transition plan, ideally aligned with the Paris Agreement.
• US “vote no” campaigns on climate-related topics targeted 107 directors in 2023, a record high.
• Twelve so-called “anti-ESG” or “climate-skeptical” climate resolutions were recorded in US and Canada in 2023, also a record high. In parallel, shareholder-sponsored “vote no” campaigns were launched against 13 shareholder resolutions.

The decorrelation between the number of climate-related shareholder proposals and average shareholder support that started in 2022 continued in 2023.

• Only two climate-related shareholder proposals passed in 2023 (both were supported by the respective company boards), the same number as recorded in 2019. This was a significant drop from 16 in 2022 and 15 in 2021.
• On average, support for climate-related shareholder resolutions decreased from 26.8 percent in 2022 to 18.7 percent in 2023, the lowest level seen since 2016.

In 2023, the number of directors targeted by “vote no” campaigns grew significantly because campaigns often targeted the full board instead of one or two select directors due to a perceived lack of responsiveness over the previous two years.

The number of management-sponsored say-on-climate proposals decreased in 2023 after a record high in 2022. Since 2021, support for these proposals has decreased; 24 percent and 15 percent received support from less than 80 percent of voting shares in 2022 and 2023, respectively.

To download a copy of the full report, please click here.