E
arly voting data from 2024 annual general meetings (AGMs), which range from July 1, 2023 to June 30, 2024, suggest this season will likely be another record-breaking year for environ- mental, social and governance (ESG) proposal submissions. As of March 29 this year, 804 ESG proposals were submit- ted, which is approximately 10% more submissions than last
year within the same period. Te 2023 AGM season had 947 total ESG proposal submissions; there were 941 in 2022 and 837 in 2021. Many more submissions are anticipated during the remaining months of this season.
Support for E&S Proposals During the 2023 AGM season, there was a notable decline in average shareholder support for E&S (environmental and social) proposals, seemingly owing mainly to greater use of prescriptive language, in- creased volume of anti-ESG proponents and new or novel proposals. Early indications show that overall E&S proposals during the 2024
AGM season may continue to see diminished support compared to the high levels of support seen in 2021 and 2022. One out of 17 environ- mental proposals and none of the 39 social proposals passed between July 1, 2023, and March 29, 2024. However, it is also possible that specific subtopics may see increased
shareholder support. If increased support on specific E&S issues occurs, it could indicate
that investors recognize certain topics as material risks to a company. It could also indicate that certain proponents made their proposals less prescriptive in order to attract greater support from institutional investors. To date, support for social proposals matches or is lower this year
than last year. Tis year, proposals relating to human rights, reproduc- tive rights, freedom of association and pay gaps that went to a vote as of March 29, 2024 all received lower average support than during the 2023 AGM season.
Climate Issues Remain a Focus Te largest institutional investors voted against two-thirds of environ- mental proposals put forward by Russell 3000 companies last year. In 2023, greenhouse gas (GHG)-related proposals constituted 74%
of all environmental proposals. Notwithstanding the SEC’s elimination of Scope 3 disclosure or emissions generated from a company’s value chain, early signs suggest that investor support will likely continue to be below 2022 levels for GHG proposals that include setting a greenhouse gas reduction target covering Scope 3. However, climate remains a primary focus for environmental pro- posals this 2024 season, particularly those relating to GHG reduction.
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