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Institutional support grows for ESG, political spending transparency, report shows

Institutional investor support for social and environmental proposals and corporate political spending proposals continues to gain momentum, according to a report from PricewaterhouseCoopers and Broadridge Financial Solutions.

Based on the analysis of 4,090 shareholder meetings held in the first half of 2018, nearly 29% of institutional investors supported such proposals, a new high compared to 26% in 2017, 21% in 2016, and 18% in 2015. The numbers appear in stark contrast to the support of retail investors, only 16% of which supported such proposals in the first half of 2018.

Support of proposals seeking transparency on corporate political spending also a hit a new high, with 29% of institutional investors supporting such proposals, up from 26% in 2017, 23% in 2016, and 20% in 2015. Retail investor support was lower, with 21% backing such proposals in the first half of 2018.

"A new theme emerged over the last few proxy seasons that shows a divergence between how institutional and retail investors view certain topics, such as social and environmental proposals, political spending disclosure by companies, and even how much participants engage in proxy voting. This divergence suggests companies would be wise to participate broadly with all shareholders," said Chuck Callan, senior vice president, regulatory affairs, Broadridge Financial Solutions and co-author of the report, in a news release.

Also in the first half of 2018, a total of 21,855 directors stood for election, 96% of which were supported by institutional investors. The number of directors who failed to receive majority shareholder support increased slightly this year, to 416 directors from 374 directors in 2017, while 1,408 directors failed to reach at least 70% support in the first half of 2018, up from 1,239 during the same period in 2017.

The number of proxy access shareholder proposals declined to 34 in 2018 from 81 in 2015, primarily because of the number of companies that have adopted proxy access. About 65% of S&P 500 companies, for example, have adopted proxy access.