Americas

Politics in Focus at Upcoming AGMs 

As You Sow’s new Proxy Preview report shows anti-ESG and reproductive health resolutions on the rise, as longstanding corporate political influence proposals evolve.  

The increasingly blurred lines between politics and business are set to dominate ESG resolutions filed for this year’s US AGM season, with a marked rise in anti-ESG proposals, and a significant expansion of resolutions about reproductive health in response to the US Supreme Court decision last June on the constitutional right to an abortion.  

The new 2023 Proxy Preview report from NGO As You Sow finds proponents have filed at least 542 shareholder resolutions on ESG issues for this year’s proxy season so far, with it on track to match or exceed last year’s unprecedented final total of 627 ESG-related resolutions – where proposals on racial justice audits saw a significant rise.  

Significant developments identified in the report for this year’s US AGM season are an increase in anti-ESG resolutions and a significant expansion of resolutions about reproductive rights and health. 

In mid-February last year, Sustainable Investments Institute had identified 27 anti-ESG proposals and for 2023 there are at least 40 so far, a big jump that suggests last year’s surge will be surpassed. Six proposals on reproductive health went to vote in 2022, with average support of 40%. As of-mid February, the 2023 Proxy Preview has identified 20 proposals focused on the issue. Corporate political influence resolutions remain the second largest slice of ESG resolutions filed (17%) after climate change (23%), with it now split in three roughly equal buckets: lobbying, election spending and value congruency of company policies.  

Heidi Welsh, Executive Director at the Sustainable Investments Institute, speaking on a webinar to introduce the new Proxy Preview this week, said investors had been pushing companies for more board oversight and disclosure of political influence in elections and lobbying for a long time with positive results. “Almost every major company has explained its oversight, and disclosure is much more common, but it still lags on dark money channels,” she said.  

She said proposals on election spending were now moving on to so-called “intermediary” spending. Proposals filed this year at Amazon, PayPal and others ask for disclosure on indirect political spending for example.  

There have also been proposals filed at Alphabet and Wells Fargo and others on how their involvement in political lobbying align with their net zero goals.  

Welsh said: “Companies are realising that this demand for transparency and frankly the need for a more open discussion around the corporate political environment is here to stay.” 

She said emerging topics of discussion between investors and companies were about corporate engagement with radical politicians and the disclosure and management of this.  

Disclosure on political spending and engagement is also a focus for anti-ESG proposal proponents. There have been at least 40 anti-ESG proposals filed this year so far, suggesting the surge that started last year will be surpassed, according to the report. It also notes that historically, anti-ESG proposals have received very little voter support, averaging 4% or less in previous years.  

The bulk of these proposals want disclosure on the risks of racial and ethnic diversity programmes. On the political engagement side, a number of anti-ESG proposals ask for disclosure on ties to China and for the first time, a handful of proposals question the benefits of ties to policy organisations such as the World Economic Forum and the Business Roundtable.  

Another new trend this year for shareholder proposals is reproductive rights, with seven this year asking how companies are handling the risks of new restrictions on abortions introduced in some US states. Seven companies also face proposals on how they will handle law enforcement queries about private health information and two make a specific request to step up digital privacy policies. Another five proposals also focus on healthcare for maternal and reproductive health.  

“Investors are calling companies to account on issues that our country is really divided on […] many things, not just abortion rights,” said Welsh on the webinar. “We’re in a really tough spot on [….] how do we deal with it in the corporate arena. It’s not easy but that doesn’t mean you can avoid it. I think business and society is integrally connected today.”  

In related news, more than 270 companies and investors have hit back at the US anti-ESG movement under the banner “Freedom to Invest”. Announced at Ceres Global in New York this week, the organisations have released a statement calling on policymakers to recognise they are free to consider all material financial risks and opportunities, including those related to the climate crisis. 

This year, at least 18 US states have proposed to adopt legislation that bans or deters ESG investing. 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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