We’re now about half way through peak voting season in Europe and North America, which tends to take place between April and June.
“It’s proving to be an interesting one,” said Lindsey Stewart, director of stewardship research at Morningstar. “The number of topics starts to pop up on companies’ proxy cards is certainly wide.”
At Amazon alone, there are 18 shareholder proposals going to vote in 2023, ranging from requests for human rights audits on its technology, through to disclosure around animal welfare issues.
Shareholders in the tech giant will be given a second chance to vote on unionisation practices, following another year of headlines about its alleged union-busting tactics. In 2022, nearly half of independent investors supported a proposal asking the firm to give its workers freedom of association and collective bargaining rights. The proposal will be re-tabled at its AGM next week.
Starbucks faced a similar resolution in March, asking it to commission an independent assessment of its tactics towards unionisation. It secured just over 50% of the vote.
“There’s a growing focus on workers’ rights, and attracting and retaining companies’ workforces,” said Stewart. “But we’re also starting to see resolutions that dive into social topics where expectations from investors are more varied,” he added, pointing to areas like civil rights, racial equity, the use of facial recognition in law enforcement, and political spending.
ShareAction will be calling out companies on DEI issues this AGM season, particularly their ethnicity pay gaps.
After pressure from the campaign group, UK-listed Compass Group, which provides food and hospitality services, announced at its February AGM that it would launch its first report on its ethnicity pay gap. Attention has now turned to Hilton Food Group, whose annual meeting is next week, and which currently has no directors from ethnic minorities and no public diversity and inclusion policies.
There was big talk last year about companies facing cost-of-living-related resolutions, but things have quietened down since then. However, there is likely to be extra scrutiny on how shareholders vote on pay packages at companies, and the UK’s Investment Association reminded remuneration committees to be mindful of the economic situation when coming up with their proposals for 2023.
Focus on climate
But the big focus remains on climate this year.
Activist groups and green investors continue to call out fossil fuel financing and underwriting. Big US banks have been hit with the latest round of proposals demanding that they stop supporting new oil and gas projects and publish climate transition plans. Dutch campaign group Follow This is returning to the ballot with its request that listed oil majors set Paris-aligned targets to reduce scope 1, 2 and 3 emissions.
NBIM has filed climate proposals for the first time ever. The asset manager for the trillion dollar sovereign wealth fund submitted four resolutions at US firms it felt were falling behind on climate targets: NewMarket, Westlake Chemicals, Marathon Petroleum and Packaging Corporation of America. It’s withdrawn the two latter requests after compromises were reached with the companies.
As with previous years, there is a big focus on transparency. But Morningstar’s Stewart said that this theme may fade out over coming years, as regulation steps in to force more disclosure.
“The sheer volume of shareholder proposals asking for more information is a sign that there’s currently a regulatory gap when it comes to corporate reporting on sustainability topics,” he noted.
Regulators around the world are trying to address this gap by introducing more detailed disclosure rules. The SEC is due to launch its climate disclosure rules later this year, and the EU is rolling out the Corporate Sustainability Reporting Directive. Since last year, listed companies in the UK have had stricter rules around how they report against the Task Force on Climate-related Financial Disclosures recommendations, and the country is developing Sustainability Disclosure Requirements.
“As that regulation starts to kick in, you would expect to see these kind of proposals fall off. Although, given the scope of data different investors feel they need, some will probably just start asking for different information,” Stewart predicted, pointing to the growing interest in natural capital and the just transition, which aren’t really covered by the current regulatory developments.
Key votes so far this proxy season
BP: The biggest battleground for climate stewardship so far this year, BP’s annual general meeting (AGM) followed its decision earlier this year to scale back its climate plan, despite getting it signed off by shareholders last year in a ‘say on climate’ vote. In response, five UK pension funds (Universities Superannuation Scheme, Brunel Pension Partnership, Border to Coast Pensions Partnership, LGPS Central and NEST) publicly voted against the re-election of the chair last month, and there was a slight uptick in support for a Paris-alignment proposal tabled by Dutch campaign group, FollowThis.
NewMarket: This vote last month was significant because it was the first ever to be based on a shareholder proposal from Norges Bank Investment Management (NBIM). It asked the US lubricant producer to set Paris-aligned targets, receiving 28% support.
The US banks: Shareholders in some of the world’s biggest banks have fired warning shots over climate in recent weeks. Almost a third of Goldman Sachs, Wells Fargo and Bank of America investors backed resolutions asking for transition plans at the three banks, against the wishes of their boards.
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- Climate change
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- Follow This
- Impact investing
- proxy voting
- shareholder voting
- Sustainability Disclosure Requirements (SDR)
- Task Force on Climate-Related Financial Disclosures
- Taskforce on Climate-related Financial Disclosures (TCFD)