Environmental and social concerns dominated shareholder proposal submissions in 2018, and there is strong evidence of investor engagement paying off.
According to Institutional Shareholder Services' Voting Analytics database, environmental and social concerns accounted for just more than half of shareholder proposals submitted at U.S. companies for the 2018 season, but with an increase in the number of withdrawn proposals and proposals receiving majority support.
Building off momentum from 2017, climate-risk proposals calling on companies to report on the resiliency of their portfolios under the 2-degrees scenario received majority support at two companies through June 30 — energy infrastructure company Kinder Morgan Inc. and Anadarko Petroleum Co. Similar proposals were withdrawn at several companies, including Chesapeake Energy Corp., Exxon Mobil Corp., Dominion Energy Corp. and DTE Energy Co., after the companies committed to enhancing their disclosures. Jamie Smith, Denver-based associate director at the Ernst & Young LLP's Center for Board Matters, said the results reinforce that "climate risk is a mainstream investor concern."
Last year, similar proposals were supported by a majority of investors at Exxon Mobil, Occidental Petroleum Corp. and PPL Corp., making it the first year that climate change-related proposals received majority support.
While climate change has been an area of focus for shareholders, investors are "not painting (companies) with a broad brush," said Courteney Keatinge, San Francisco-based director of environmental, social and governance research at proxy-voting advisory firm Glass, Lewis & Co.
Rather, investors are "looking really closely at these issues and taking into account what companies have disclosed and what they've done," Ms. Keatinge said, noting that 2-degree proposals at MGE Energy Inc. and PNM Resources were supported by only 11.1% and 14.5% of shareholder votes, respectively, this year.
Other environment-related proposals that received majority support this year included a methane emissions management proposal at natural gas company Range Resources Corp., and broad sustainability proposals at Kinder Morgan and food service equipment company Middleby Corp. The Kinder Morgan sustainability proposal has been filed every year since 2014, but this was the first year it received majority support, Ms. Keatinge said. So far this year, seven environmental proposals have received majority support, up from four in 2017, according to sustainability advocacy group Ceres.
According to the ISS Voting Analytics database, 63% of 27 sustainability proposals were withdrawn or not in proxy/ not presented this year, while that happened for 50% of 38 greenhouse gas emissions proposals. Last season, the figures were 50% of 24 sustainability proposals and 48% of 31 greenhouse gas proposals.