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Investors’ demands for ESG disclosure continue to increase, with a focus on issues material to companies’ business and their ability to drive financial performance and competitive advantage. In the ongoing 2019 proxy season, climate change, social issues and board and employment diversity are emerging as key shareholder proposal topics, according to ISS Corporate Solutions. Georgeson’s analysis of available shareholder proposal data from July 1, 2018 to April 1, 2019 includes 671 shareholder proposals, 99 of which have been omitted to date, and 115 of which have been withdrawn. Of the remaining proposals, 55 have been voted on to date. The impact of the SEC backlog of potential no-action dispositions on the 2019 proxy season is uncertain as of April 12, 2018, the date this article was submitted for publication. Environmental and sustainability issues Climate change continues to be a focus for shareholders. Seven companies, including American International Group and several energy firms, received shareholder proposals seeking reporting on analysis and strategy related to the 2°C scenario or an assessment of the portfolio impacts of policies to meet the 2°C scenario. Seventeen shareholder proposals broadly related to climate change risks and reporting, with five such proposals specifically requesting reporting on plans to align with Paris Agreement goals. There have been 26 sustainability reporting shareholder proposals submitted so far. Five such proposals specifically requested reporting using SASB metrics.
Social issues Shareholders are displaying increasing interest in social issues, from how technology impacts society and human capital management to gun violence and the opioid epidemic. Alphabet and Facebook both received shareholder proposals asking them to report on content management issues. Alphabet received a proposal to assess and report on the human rights impact of censored search in China. The Nathan Cummings Foundation submitted a proposal asking Amazon to report on its efforts to address hate speech. Additionally, several firms have received shareholder proposals to strengthen prevention of workplace sexual harassment and report on sexual harassment. A few proposals have already received strong shareholder support. A request that American Outdoor Brands report on gun violence received 52.2 percent support. Nine proposals have been submitted seeking reporting on the implementation of governance measures related to opioids. To date two of these proposals have come to a vote, at Walgreens Boots Alliance and Rite Aid: the Walgreens proposal received 60.5 percent support and the Rite Aid proposal received 61.4 percent support.
Board and employment diversity Diversity proposals continue to gain momentum in 2019, with increased focus on employee diversity, consistent with views expressed by major institutional investors such as BlackRock, State Street Global Advisors and Vanguard. Forty-five shareholder proposals related to directors’ diversity and qualifications have been submitted. Twenty-one companies, including Amazon, CBS and McDonald’s, received proposals related to workforce diversity. Thus far the only such proposal to reach a shareholder vote received 48 percent support at Analog Devices.
Takeaways As investor demand for increased ESG information grows, companies must determine what, where and how to report on material ESG risks, policies and practices. Understanding how investors collect ESG data, how they incorporate ratings frameworks and scorecards into their analyses, and how they compare companies relative to peer groups can also help issuers enhance their disclosures with the ESG information valued by their investors. It is also crucial for companies to have a proactive shareholder engagement program to provide a forum for ESG discussion.
About Computershare | Georgeson
Computershare | Georgeson is a global market leader in transfer agency and share registration, employee equity plans, mortgage servicing, corporate governance advisory, proxy solicitation and stakeholder communications. We also specialize in a range of other diversified financial services. Founded in 1978, Computershare is renowned for its expertise in high-integrity shareholder data management, high-volume transaction processing and reconciliations, payments and stakeholder engagement. Established in 1935, Georgeson, a Computershare company, offers unsurpassed advice and representation for annual meetings, mergers and acquisitions, proxy contests, extraordinary transactions and unclaimed property services. We also offer corporate governance advisory.