Every autumn I publish a detailed analysis of trends in support for ESG-focused shareholder resolutions in the U.S., where most such proposals are voted on.
Last year, my analysis led me to ask the question: “Are there too many?”
The volume of shareholder proposals was up, support was down, and the quality of such proposals was being questioned out loud by some of the largest asset managers in the market, BlackRock and Vanguard in particular.
Having just published this year’s analysis, it’s time to call it.
Yes. There are too many shareholder proposals. So many that it’s beginning to pose a threat to shareholder democracy.
The fate of shareholder proposals tied to environmental, social, and governance issues has gained a great amount of attention over several years, despite their forming a small minority of proposals filed at shareholder meetings. So it's worth examining the nature of this area closely.
But where’s the evidence that there are just too many?
Not everyone will agree with perceptions from the likes of BlackRock or Vanguard that certain proposals are “poor quality” or “overly prescriptive.” There is of course a valid range of opinions on such matters; if everyone had the same opinion on matters of materiality and value, then we wouldn’t need capital markets at all.
However, what is undeniable is that the last two proxy years have seen an explosion in the number of ESG shareholder proposals that the overwhelming majority of shareholders reject.