Skip to main content
Nov 21, 2022

Governance professionals guide on preparing for 2023: Part 2

More insight from Corporate Secretary’s recent forum in New York

There has been a proliferation of what some observers call ‘anti-ESG’ shareholder proposals – those that are very similar to other ESG resolutions but come from conservative proponents – and there is a widely held expectation that they will be a feature of the upcoming proxy season.

This topic was among those discussed at the recent Corporate Secretary Forum in New York, where governance professionals gathered to share their insights on issues affecting the community going into 2023.

The recent spike in anti-ESG shareholder proposals has been primarily – though not exclusively – seen in the social and environmental spaces. Research from Georgeson found twice as many proposal submissions (52) in the 2022 proxy season that were from anti-ESG proponents as in 2021 (26). In many cases, such resolutions are similar or almost identical to pro-ESG proponents’ resolutions but their supporting statements sometimes indicate different motivations.

Those conservative proposals haven’t garnered the same levels of backing as their pro-ESG equivalents – according to Georgeson they secured average support of 9.5 percent – but observers anticipate that they will continue to appear in 2023.

‘More conservative-leaning ESG proposals are here to stay’ in a climate where ESG is facing pushback from comptrollers and treasurers of right-leaning states, Jonathan Haymon, vice president and director of proxy voting at Federated Hermes, told attendees at the forum.

The SEC has proposed changes to Rule 14a-8, which governs the process by which the agency decides whether to grant no-action relief for companies that seek to omit proposals from their proxies. In the past, those filing similar proposals first have thereby made it relatively easy for companies to exclude proposals filed later in the season that are similar even if they have a different intent.

Haymon said he believes that, if the commission approves updating of the ‘duplication’ standard, there will be more instances where similar proposals from both pro and anti-ESG proponents are on the same companies’ proxy statements.

The lower levels of support for ESG proposals from conservative groups suggests investors are aware of the differing motives proponents may have, but companies don’t always identify the groups in their proxy statements.

Federated Hermes is interested in who proponents are but doesn’t want to have to figure out their motives, Haymon said. He acknowledged that this is not the majority view and that many of the firm’s peers are voting based on a proponent’s identity. As such, he urged companies to disclose that information.

Josh Black, editor-in-chief of Insightia, a Diligent brand, commented that getting proposals from opposite sides of an issue makes it more difficult for a company to negotiate with the proponents, so more measures make their way onto ballots.

He added that with growing numbers of proposals featuring on some high-profile companies’ proxy statements, groups may feel their resolutions aren’t gaining much voting traction and their message is getting lost in the crowd.

This may lead them to try more ‘media-friendly’ tactics to gain attention, such as writing letters criticizing companies, Black suggested. Such letters often don’t have a direct request for action, making it difficult for boards to act on them other than to offer a broad defense, he said, adding that some may opt to be less visible on ESG issues. 


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...