Environmental, Social Topics Largest Category of Shareholder Proposals Filed
Environmental and social (E&S) topics represent the largest category of shareholder proposals submitted in 2013, comprising just under 40 percent of all shareholder proposals filed, says an Ernst & Young report.
E&S proposals also had the highest percentage of proposals withdrawn in connection with engagement at 30 percent, compared to less than 25 percent for all shareholder proposals.
Ernst & Young’s report, Taking flight: Environmental sustainability proposals gain more attention, identifies the specific requests investors are making in this context, company practices referenced by shareholder proponents in their supporting statements and examples of company actions that have led to withdrawals.
The top five E&S concerns shareholders brought to companies are: political spending/lobbying (36 percent), environmental sustainability (35 percent), corporate diversity/equal employment opportunity (8 percent), labor/human rights (7 percent) and animal testing/animal welfare (4 percent).
Within the subcategory of environmental sustainability, about half of all requests were climate-change related proposals, followed by energy efficiency and recycling (14 percent) and energy extraction-related risks (12 percent).
Within climate change and sustainability-specific proposals, investors most commonly requested cuts in greenhouse gas emissions, greater supply chain transparency and improved sustainability disclosure.
Ernst & Young says that these common requests have generated more engagement and follow-up action between stakeholders and companies, and led to the high proposal withdrawal rates. Shareholders have also begun to benchmark what other companies do when making their proposals, which has helped in giving the companies a point of reference to work with while exploring possible action.
In August, Ceres reported that investors filed 110 shareholder resolutions this proxy season related to sustainability issues and climate change with 94 US companies. Ceres, a business nonprofit, helped coordinate the shareholder filings.
Among resolutions filed with major US manufacturers, consumer brands and service providers such as Nike, UPS and Starbucks, many investors requested board oversight of corporate sustainability issues and comprehensive disclosure via sustainability reports. Overall, investors withdrew more than 40 of the 110 resolutions after the companies responded affirmatively to their specific requests, Ceres says.
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