Below is an excerpt from ISS Corporate Solution’s recently released report “U.S. Shareholder Proposals Jump to a New Record in 2023”. The full report is available for download from the ISS Corporate Solutions (ICS) online library.
Investors raised their voices at U.S. annual general meetings in the first five months of 2023, with social issues such as diversity, equity and inclusion and a new wave of anti-ESG sentiment fueling a record number of shareholder proposals, an analysis by ISS Corporate Solutions found.
We reviewed proposals submitted for Russell 3000 company AGMs held between Jan. 1 and May 31 for each year since 2019 to shed light on how investors were bringing up their concerns ahead of the May 25 peak U.S. AGM date, which topics carry the greatest currency, and their level of success.
- The volume of shareholder proposals for annual meetings held between Jan. 1 through May 31 jumped 14% from 2020 to 2023.
- The increase can be attributed in part to the rise of anti-ESG shareholder resolutions that, albeit from a small base, have grown by more than 400% since 2020.
- Large-capitalization S&P 500 companies accounted for 90% of the shareholder proposals.
- Proposals on social issues, such as diversity, equity, and inclusion (DEI), and human rights, are growing in prevalence and now represent 35% of the total, showing consistent, year-over-year growth since 2020.
- The volume of environmental proposals in 2023 is down from a peak last year. Nonetheless, climate remains the most common subcategory of proposals.
- While the number of governance proposals is down, the topic remains relevant; board-related issues and shareholder rights are among the most common proposals and they continue to receive strong support from shareholders.
- Just 30% of the proposals submitted have reached a final vote in the period, 111 have been withdrawn so far and almost 400 are still pending.
- To date in 2023, median support for shareholder proposals stands at 25%, and just 8.3% received majority support compared with 12% for the first five months of 2022.
Jun Frank, Managing Director, Compensation & Governance Advisory
Sandra Herrera Lopez, Ph.D., Vice President, ESG Content & Data Analytics, ISS Corporate Solutions