Key ESG Issues Up for Shareholder Vote
Employee welfare and political influence are among the big environmental, social, and governance issues this year.
|Editor’s note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.|
April to June is a busy time for U.S. investors, with around 3,000 shareholder meetings taking place and tens of thousands of proxy votes being cast.
Why should you cast your ballots, if you haven’t already? As my colleagues explain, proxy voting allows you to influence company operations and decisions--and increasingly, you can have a say in shareholder resolutions tied to environmental, social, and governance issues. Companies that effectively address their material ESG risks are positioning themselves to protect their long-term sustainable profits.
Following record support for environmental and social issues in 2019, high-profile commitments to stakeholder governance from corporate leaders and large investors, and increasingly forceful global investor engagement on climate action by leading institutions--the 2020 proxy season was already shaping up to be interesting. But the coronavirus crisis is creating a stronger sense of urgency and commitment to sustainable business practices and responsible investment.
With one month to go in the 2020 proxy season, let’s take a look at voting to date and flag upcoming resolutions.
Here’s what we’re seeing so far: a record number of resolutions passing.
A record number of environmental and social shareholder resolutions have passed with majority shareholder support in 2020. Since April, at least 16 resolutions have passed so far and one more received 49.96%, making 17 resolutions with at least 50% support--up from 10 over the period April to June last year.
Beyond the 2020 proxy season: pandemic response and race will feature more prominently.
While the shareholder resolutions being voted were almost all filed well before the onset of the pandemic crisis, we can expect to see the number focusing on worker treatment, supply chain labor conditions, human rights considerations, and nondiscrimination--together comprising the "S" in "ESG"--rise significantly in 2021 and for labor groups to take a more prominent role in defining the concerns.
Stakeholder Capitalism Seems Here to Stay
The ideas of stakeholder capitalism and inclusive capitalism extend the purpose of the corporation beyond profit and extend the time frame for evaluating corporate performance beyond quarterly metrics. The investor case was crystalized in BlackRock’s 2020 CEO letter:
"Companies must be deliberate and committed to embracing purpose and serving all stakeholders--your shareholders, customers, employees, and the communities where you operate. In doing so, your company will enjoy greater long-term prosperity, as will investors, workers, and society as a whole."
The investor case base has been further underscored by comparisons of how companies and portfolios have weathered the pandemic, and it has fundamental implications for investor stewardship. Statements released by global investor groups in recent weeks emphasize inclusivity, human capital management, and renewed commitment to the low-carbon transition as strategies for economic recovery from the COVID-19 pandemic. Data emerging from the 2020 proxy season show these priorities translating into proxy votes. We expect shareholder resolutions, proxy voting, and investor engagement to place greater emphasis on worker treatment, inclusivity, and discrimination beyond the 2020 proxy season.
Jackie Cook does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.