Institutional investors filed a record number of shareholder resolutions this proxy season as they pushed companies to go both deeper and wider on ESG issues.
For recurring ESG concerns such as climate change and diversity, investors pushed public companies to go deeper by providing quantitative reporting and specific plans.
They also widened their ESG lens, pressing topics like human capital management, political spending and lobbying and biodiversity.
Above it all, investors put more pressure on corporate board directors to show how they are managing their ESG challenges.
As the 2022 proxy season got underway in early spring, shareholders had filed 20% more ESG resolutions than the previous year, according to shareholder advocacy groups As You Sow, the Sustainable Investments Institute and Proxy Impact.
In the U.S., some of the momentum is being attributed to leadership and policy changes at the U.S. Securities and Exchange Commission, where companies have had less success this year blocking shareholder resolutions and are preparing for tougher climate disclosure rules later this year.
While there is also political pushback in the U.S. against further regulation, "more and more companies understand that the economy is changing," said Josh Zinner, CEO of the Interfaith Center on Corporate Responsibility in New York, an ESG shareholder advocacy group representing 300 global institutional investors with more than $4 trillion in managed assets collectively.
This proxy season, ICCR members filed 489 resolutions, compared with 308 last year. To date, 34 ICCR member-led resolutions have received majority votes, compared with 23 last year.
With the proliferation of shareholder ESG proposals this year, "you have to focus on fiduciary values," and not be overly prescriptive, said Benjamin Colton, global head of asset steward, voting and engagement for State Street Global Advisors in London. Pension funds and other clients "are always going to be looking through that long-term lens," he said.
Investor ESG priorities vary widely by country or region, with climate, diversity and human capital management important to U.S. investors, and supply chain management a bigger concern in Australia. For that reason, said Mr. Colton, "it is important that asset managers are going to be focused on value, not values," he said.