The pressure on companies to tackle social and environmental issues has intensified this year despite the pandemic, with a record number of resolutions addressing issues from climate change to diversity passing at annual meetings globally in 2020.
A total of 21 shareholder resolutions focused on social or environmental issues received the support of a majority of investors so far this year at companies around the world, up from 13 in 2019 and 2018, and just five in 2017, according to Proxy Insight, a data provider.
Proposals around deforestation at consumer goods business Procter & Gamble, climate lobbying at oil major Chevron and employee diversity at Fastenal, a distributor, were among the resolutions that were backed by at least 50 per cent of shareholders, according to the data.
Deborah Gilshan, an independent adviser on investment stewardship and environmental, social and governance issues, said investors were more willing than ever to support resolutions on the environment and on social issues like diversity.
“We are, finally, seeing the translation of words into actions where asset managers’ policies on these issues are being reflected in their voting decisions,” she said.
Shareholder rebellions are usually a source of embarrassment for companies, with asset managers traditionally voting in line with management’s recommendations at annual meetings.
The growing willingness by investors to back environmental, social and governance resolutions at annual meetings will pile pressure on companies to address investors’ concerns before they go to a vote, Mr Gilshan said.
She added that many investors had been forced to consider backing environmental and social resolutions, even if management suggested voting against them, because of demands from their clients and public scrutiny of their AGM voting records.
But Ms Gilshan cautioned on “being too positive” on the growth in support for shareholder resolutions. “There are still too many well-argued shareholder resolutions on environmental and social issues that are not receiving at least 50 per cent support.”
According to Proxy Insight, a total of 233 social or environmental shareholder resolutions went to a vote this year. Just over half of those received at least 20 per cent support.
Robyn Hugo, director of climate change engagement at Just Share, an investor advocacy group, said it was encouraging that investors were voting for resolutions as part of their engagement with companies, “something that would have been unthinkable just five years ago”.
“But what we need to see is large, mainstream asset managers turning up and filing their own resolutions — with emissions reduction and the protection of human rights as their goal — that move beyond disclosure to a fairer world for all,” she said.
Last week, activist investor Chris Hohn called on big asset managers to file resolutions over climate change at companies around the world. Shareholder proposals are typically filed by coalitions of smaller investors.
David Cumming, chief investment officer for equities at Aviva Investors, the UK asset manager, said the annual meeting was a vital tool for investors to ensure companies had a plan for dealing with climate change.
“We prefer to stay invested and partner with companies as they develop a climate strategy, but punitive action at the annual general meeting is an escalation lever for dealing with laggards before the ultimate sanction of divestment.”