Our key takeaway: We’re seeing the usual suspects raised in shareholder ESG proposals during the 2022 proxy season, but they are joined by proposals that take a different angle on traditional ESG topics. Proposals on climate change targets and goal-setting are complemented by others focusing on environmental justice and the links between human rights and the environment. And requests for additional human rights disclosure are tied in with issues like systemic racism, social justice and public health.
As You Sow, Proxy Impact, and Sustainable Investments Institute (Si2) released the 2022 edition of their annual U.S. proxy preview:
An overall bump in ESG-related shareholder proposals: 529 shareholder resolutions on environmental, social and governance (ESG) issues have been filed for the 2022 proxy season in the U.S., reflecting a 20 percent increase from the same time last year. The report finds that the 2022 season “heralds significant shifts in the topics proponents raise, with many more on climate change and racial justice,” reflecting increasing investor interest in environmental and social issues. At the same time, resolutions on general sustainable corporate governance have declined “dramatically” compared to previous years due to continued improvements in board diversity (a key issue of years past) and due to the increasingly “ubiquitous sustainability disclosures from companies” (either voluntary or as required by law).
Continued rise in climate-related proposals—with a new ‘people’ lens: According to the report, “[c]limate change has jumped to the top of the proxy season agenda this year and is the biggest single topic.” The number of proposals on climate change has increased from 79 last year to 110 this year, “well above this decade’s previous peak of 83 in 2018.” 20 proposals focus on climate-related political influence, while others specifically target emissions: per the report, a “striking change is the near-total focus on greenhouse gas (GHG) emissions targets, with most proposals asking for a transition to net-zero status by 2050.” In addition, “[m]ore than two dozen ask companies to set goals, with a new focus on all types of GHG emissions,” including Scopes 1, 2 and 3. The twist for 2022? New human rights resolutions linked to environmental issues are bringing together a ‘people’ and ‘planet’ lens to investor climate concerns. For example, “[t]wo new proposals seek to address expected social inequities as the world warms and economic disruption affects the most vulnerable. One at Chevron asks about financial and ecosystem risks and threats to indigenous peoples in the Arctic, while another asks Marathon Petroleum to explain its compliance with the Just Transition guidelines issued by the International Labour Organization, including impacts on workers and communities.”
New angles on requests for human rights assessments and reporting: Among topics that often feature prominently on investors’ agendas (such as decent work, diversity, wages, working conditions and benefits, among others), 2022 is seeing a rise in emerging issues. For example, there was a 40 percent increase in filings related to racial justice compared to last year, and proposals have evolved to “name specific stakeholder groups to consult and all seek external expertise and advice.” Another emerging issue is environmental justice, with five proposals “seeking risk and impact reports from 3M, American Water Works, Chemours, Chevron, Honeywell International and Kinder Morgan.” There is also a shifting trend within investor requests for human rights reporting and disclosure of human rights risks. While only “15 resolutions voice longstanding requests for assessments of human rights policies and risks,” proposals are raising questions on specific risks like Uyghur forced labour and sourcing from China (Apple), child laborers and cocoa in West Africa (Hershey), pandemic protections for supply chain farmworkers (Kroger) and labour rights (Amazon). Health is also featuring large in light of the COVID-19 pandemic. For example, “Oxfam America has a new resolution at Moderna and Pfizer about sharing intellectual property and technical knowledge to expand access to Covid-19 vaccines and treatments in low- and middle-income countries.”
