Investors focus on climate, abortion access in potential record proxy season

Investors are filing a potentially record-breaking number of shareholder resolutions at public companies this year, with a big focus on climate change, human rights and reproductive health care.

As of mid-February, there were a total of 542 shareholder resolutions filed, putting the season on track to match or surpass the 627 brought by investors last year, according to a report last week by Proxy Preview. The resolutions can force proxy votes, although many are voluntarily withdrawn by shareholders when companies agree to address their concerns. The number of votes — and their success — has risen dramatically over the past few years as concerns around ESG issues have increased and as the Securities and Exchange Commission has taken a more investor-friendly stance on shareholder resolutions.

Last year, about 30% of ESG-themed resolutions that went to a vote got at least 50% support from shareholders, down from nearly 35% that won that much support in 2021. In part, that reflected an overall increase in the number of votes and the breadth of what some shareholders were asking for.

One firm, BlackRock, had noted that its support for ESG-related shareholder resolutions would be lower in 2022 than in 2021 because of that trend. Another factor in the lower success of votes was that a number of anti-ESG proposals made their way to proxy ballots, and those resolutions received very low support, according to Proxy Preview.

“Investors want more data on diversity, equity and inclusion, more disclosure about climate change, and they want to know how companies are overseeing and disclosing their efforts influence politics,” Heidi Welsh, executive director of the Sustainable Investments Institute, said during a presentation about the new report.

One area that investors expanded on last proxy season was the role of insurance companies in climate change, namely their underwriting of policies covering new fossil-fuel extraction projects. Companies that faced votes on that issue last year included Chubb, The Hartford and Travelers Insurance, with the resolutions filed by fund provider Green Century Capital Management. None of the votes saw majority support.

However, Chubb bent slightly to investor pressure last week, announcing new underwriting criteria that would require some clients to reduce methane emissions. The insurer also said that it wouldn't provide new coverage for “for oil and gas projects in government-protected conservation areas in the World Database on Protected Areas that do not allow for sustainable use.”

Green Century refiled its resolutions this year at the same insurance companies. Other financial services companies facing possible votes on financing for fossil-fuel extraction include Bank of America, BNY Mellon, Citigroup, Goldman Sachs, Huntington Bancshares, JPMorgan Chase, Morgan Stanley, PNC Financial Services Group and Wells Fargo.

Those initiatives have gotten the attention of anti-ESG politicians. A bill currently before the Texas State Legislature, for example, seeks to prevent any insurers in the state from implementing shareholder resolutions that would limit their abilities to provide coverage for fossil-fuel projects, require them to track or reduce greenhouse gas emissions, or change coverage because of environmental, social or political issues.

So far this year, about 23% of the shareholder resolutions filed are on climate change, with another 17% on companies’ political influence, 15% on human-rights issues, 8% on working conditions, 8% on health, 7% on diversity at work and an additional 7% on other environmental issues, according to Proxy Preview.

There are at least 30 shareholder proposals this year focused on reproductive health care, up from 15 in 2022. Companies including UPS, Coca-Cola, Lowe's, TJX and Pepsi facing potential votes on the risks they face related to state policies restricting abortion or other access to reproductive health care and how the companies are prepared to respond. TJX addressed the proposal, which has since been withdrawn, the report notes.

Proxy proposals on that issue last year surfaced as the Supreme Court issued its ruling overturning Roe v. Wade, and shareholders on average supported the resolutions by 31%, according to Proxy Preview.