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Sep 27, 2022

Proxy season 2022: The story behind falling support for ESG proposals

Some ESG critics may be tempted to see falling average support for shareholder proposals this past proxy season as a sign of declining interest. Ben Maiden says industry professionals see a different picture

The 2022 proxy season has had a touch of the Rorschach test about it, based on some of the headline figures from voting on the year’s ESG-related shareholder proposals.

According to a report from Proxy Impact, the Sustainable Investments Institute and As You Sow, the six months to the end of June saw a record-breaking 282 votes and 34 majority votes (equal to the same period last year) backing ESG shareholder proposals seeking disclosure and action from US companies. This backs the widespread narrative of recent years that ESG-linked investing and pressure on companies to meet expectations on issues such as climate change and diversity continue unabated.

On the other hand, data from Diligent shows that although record numbers of environmental and social shareholder proposals reached proxy statements, average levels of support were lower this year. Environmental proposals received an average of 33.6 percent of votes cast, down from 41.2 percent in 2021. Social proposals in the first six months of 2022 received an average of 24.7 percent of votes cast, down from 36.2 percent last year.

Some observers might see these figures as evidence investors are losing focus on ESG matters amid the war in Ukraine, supply-chain crises and broader economic uncertainty, as well as pushback from some lawmakers.


Professionals from both the shareholder advocacy world and corporate advisory firms see more than the numbers, however. The record number of proposals getting to votes at AGMs this year reflects continued activity from the proponent community, they note.

Importantly, this also follows the guidance update from the SEC’s division of corporation finance last fall on the process – under Rule 14a-8 – through which it decides whether to give no-action relief to companies that seek to exclude shareholder proposals from their proxy statements.

The division rescinded three staff legal bulletins that had been introduced during the Trump administration in a move widely seen as making it less likely that it would grant such relief, in turn meaning that a wider array of ESG proposals would make it onto proxy statements.

This was indeed the result, professionals say, and it meant some proxy statements featured resolutions seeking to place prescriptive or far-reaching demands on companies – resolutions the SEC would have allowed companies to exclude in previous years. This includes proposals asking for concrete steps to reduce greenhouse gas emissions, such as by ceasing to underwrite or finance projects, rather than simply seeking disclosures around the risks issuers face from climate change or their targets.

Observers also note that there has been a growing openness among companies – including their IR and governance teams – to negotiate with proponents, thereby potentially having resolutions withdrawn rather than go to a vote. The result is that proposals making it as far as AGMs are more likely to include more prescriptive resolutions that companies are unwilling to reach an agreement on and investors are less likely to support, even if they address the same areas of concern as other proposals they favor.

This argument gained additional currency when BlackRock in late July issued a report on its proxy voting during 2021-2022. The asset manager this proxy year supported 22 percent of the environmental and social shareholder proposals it voted on globally, down from 47 percent last year.

The report’s authors write: ‘Whereas last year we saw climate-related shareholder proposals that addressed material business risks and often requested reports providing information... in 2021-2022 [BlackRock Investment Stewardship] observed and assessed several notable themes that ultimately reduced our support for some shareholder proposals.

‘For instance, such proposals sought decommissioning fossil fuel assets, elimination of financing and insurance underwriting for fossil fuel projects and cessation of fossil fuel exploration and development. Many of these more prescriptive proposals attracted lower levels of investor support more broadly.’

This is an extract of an article that was published in the Fall 2022 issue of Corporate Secretary sister publication IR Magazine. Click here to read the full article.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...