I’ve blogged many times before about why ESG/sustainability professionals should not try justify their work or jobs by focusing on investor demands. Meredith recently wrote about another reason over on the TheCorporateCounsel.net:
In its fourth-annual analysis of E&S voting results, T. Rowe Price seems to have jumped on the anti-shareholder-proposal-process bandwagon. This HLS blog takes issue with shareholder proposals T. Rowe Price believes are not “tethered to value creation for shareholders,” which it claims now represent over half of all proposals:
– About 45% of resolutions we examined for 2023 fit under the general description of efforts to enhance company performance by improving transparency or operations around a key aspect of the business.
– On the other hand, about 55% of proposals in 2023 exhibited no such alignment.
In its opinion, those proposals “were designed to direct the company to change the mix of its business in a meaningful way, to raise awareness of a particular social or environmental issue having no connection to value creation, or to advocate for changes motivated by considerations other than long‑term performance.” They argue that this is a “misuse of the shareholder proposal vehicle” that’s caused the utility of shareholder proposals to deteriorate, particularly in the U.S. and Canada.
Efforts or initiatives that are not “tethered to value creation for shareholders” should be avoided by ESG/sustainability professionals and definitely not relied on for job security or keeping internal departmental funding. You are far better off looking inside the company for ways to improve business fundamentals – which I talk about in the next blog, along with interesting new survey results from MorganStanley.
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