Earlier this week over on our Proxy Season Blog, Emily pointed out:
ISS Corporate Solutions recently announced that the peak of the U.S. corporate annual meeting season will be on May 19th, which is right around the corner! There are 119 meetings scheduled that day, including for companies like AT&T, Cheesecake Factory and Western Union.
In honor of Peak Corporate Annual Meeting Season Day (which of course isn’t a real “day”), I’m borrowing more from Emily and Liz who write about this matter extensively. For instance:
Here’s a memo from Brunswick highlighting the trend of investors turning activist on ESG matters (on pg. 6), with activist-style tactics being used to light a fire under companies who aren’t acting fast enough on ESG. The article also draws attention to Climate Action 100+, an investor initiative that’s “integrating year-round ESG engagement strategies, and flagging shareholder proposals at AGMs.”
… And we’ve also blogged about Majority Action’s report analyzing proxy voting behavior of some of the largest Climate Action 100+ initiative members & how a majority of those members voted in support of directors regardless of company compliance with net-zero company benchmark indicators.
With all of that in the background, we’ll stay tuned to see how much the Climate Action 100+ initiative members utilize the Climate Action 100+ benchmarking & flagging tools at their disposal. Investors this year have generally been motivated to engage with companies on climate-related issues & you’ll want to continue being responsive, even after your annual meeting is over.
Speaking of CA100+, Emily wrote:
One of these flagged proposals was As You Sow’s proposal requesting the Boeing board to issue a report on whether and how Boeing met the criteria of Climate Action 100+’s Net Zero Indicator – and this proposal received a whopping 91.36% approval, per Corporate Secretary…
In this case, the board actually recommended a vote for this proposal, which might partly explain the high approval rate.
And this – which relates to how companies are responding to the situation in Ukraine and potential future complexities and risks likely to arise in relation to human/employee rights in the wake of the anticipated Roe v. Wade decision:
… to help your board & management better prepare for any surprises, Bryan Cave’s blog also lists various “what if” questions that might come up in this year’s Q&A sessions:
– Is the company planning to change its employee benefit package in response to the recently leaked Supreme Court opinion?
– What changes, if any, have management and the board made or do they intend to make to the company’s political contributions policy in light of the January 6 U.S. Capitol attack?
– Is the company planning to speak out about proposed legislation in the state(s) (where it is headquartered or has significant operations) that targets members of its employee population, customers or other constituencies?
– What steps is the company taking to become ESG compliant?
– What is the impact on the Company’s business of sanctions arising from the Russia-Ukraine crisis and what actions has the company taken to address the Russia-Ukraine crisis?
– What efforts are being made to counter the impact of sanctions arising from the Russia-Ukraine crisis?
– What is the company currently doing to strengthen inclusion and diversity within the organization?
The blog also cautions that while companies may be able to technically avoid answering these types of questions, companies may want to consider addressing them sooner rather than later, especially if the companies have a large, geographically diverse employee base.
What This Means
Obviously, every company has already wrapped up their preparations for this year’s voting and knows what actions they will take on the ESG initiatives. One interesting part of this year’s Annual General Meeting (AGM) season is we are seeing the impact of SEC’s Staff Legal Bulletin 14L issued last November which, as John Jenkins explained, “takes a sledgehammer to four years of interpretive guidance on the exclusion of ESG-related shareholder proposals from proxy statements.”
Another key element is the speed at which ESG developments are happening, and whether companies are keeping up. I wrote earlier this month that
My opinion of the current state of materiality assessments is that they are frequently performed once per year – and then primarily for the purpose of ESG reporting. If the past 6 months is an omen of what to expect in the future, companies should seriously consider semi-annual or potentially even quarterly reviews of/updates to those assessments and linking the outcomes directly to operating strategies.
The outcomes of this year’s AGM season are likely to support that idea.
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