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In the woke wars, there are no winners

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[pause for applause/booing]

OK great stuff, let’s look at some words and pictures. From Barclays:

The 2022-23 proxy seasons have featured increases in both pro-ESG and anti-ESG shareholder proposals — and lower success rates for both.

Looking at Fortune 250 companies over the past half-decade, analysts Jessica Whitt and Alexa Walls found environmental and social proposals are more popular than ever, and also less popular than ever.

If you’re struggling to read that chart, here are the words:

After a steep increase in 2022, the number of Environmental and Social shareholder proposals remained at a high level in 2023. However, within our sample, just four E&S proposals passed and the average level of shareholder support declined vs. 2022.

Within this bloc, a record high was for distinctly environmental proposals, with climate-specific proposals driving the rise. How did this green swath fare in 2023?

However, among this 250-company sample, no environmental proposals passed in 2023 and average support for environmental proposals declined to 19% from 32%.


Anti-ESG rhetoric is on the rise, which is a slice but not the whole cheesecake, Barclays reckons:

Amid intense scrutiny on ESG, it follows that asset managers are taking more selective approaches to voting on E&S shareholder proposals. However, we believe there are additional factors to consider beyond anti-ESG rhetoric and comparing the 2022-23 proxy seasons to prior years does not make for apples-to-apples comparisons. While it is difficult to disentangle, some of the decline can be explained by other factors. These include lowered thresholds for company proposals, continued mix shift to passive funds, stronger company defences against proposals, and greater focus on energy security.

So what else has changed? Barclays sees contributions from a bunch of sources pulling in different directions:

— Lower thresholds for proposals to succeed, including making it more difficult for businesses to request “no action” letters from the SEC, have boosted volumes;
— SEC rule 14a-8, introduced in 2020, increased the amount of paperwork needed for proposals, and made it harder to resubmit;
— amid a continued shift towards passive investment (yawn), asset managers are engaging less with E&S proposals. (Barclays thinks this dynamic could swing back the other way as BlackRock and the gang implement “voter choice” strategies);
— Companies are kinda already doing things.

More on that last one:

Companies’ ESG practices and performance have progressed over the course of the last five years, driven by pressures from a variety of stakeholders. For example, a greater proportion of companies have established net zero targets, linked executive compensation to ESG targets, established board-level ESG committees, and increased levels of diversity. Corporates’ increasing attention to Environmental and Social issues has provided management teams with a stronger argument ‘against’ shareholder proposals.

Amid all of this, what of anti-ESG? The star of ESG hater Vivek Ramaswamy (“a net worth of nearly a billion dollars, according to Forbes”, DYOR) appears to be on the rise, but is his side winning hearts and mind in America’s multifarious AGM venues??


Soz, Vivek.

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