The 2024 proxy season was expected to be more of the same trends we saw in 2023. A new analysis by Morningstar confirms these predictions showing support for ESG proposals flattening, and fewer proposals getting serious consideration. In 2023, 54 ESG proposals gained at least 40% support – Morningstar’s threshold for considering a proposal a “Key Proposal.” In 2024, that number is down to 37. These Key Proposals saw an average of 48% support when adjusting for the influence of company insiders, holding steady from 2023. Several large asset managers took a step back from ESG in 2023 and softened their proxy voting guidelines. This largely accounts for the reduction in Key Proposals. Morningstar writes:
“The pullback in support for environmental and social shareholder proposals last year by several large asset managers, including Vanguard, BlackRock, and Capital Group, presents a particular problem for key resolution analysis… Reduced support of the Big Three for E&S resolutions (primarily BlackRock and Vanguard) was the biggest factor in the decline. Partial-year reporting of voting results suggests that trend continued into this year.”
While support for environmental and social proposals remains low, governance proposals are getting renewed attention as shareholders are crafting proposals designed to increase board accountability. Anti-ESG proposals continued their upward trend but, while the number of Anti-ESG proposals is on the rise support for Anti-ESG proposals remains low. While the outcome of the 2024 proxy season may be seen as disappointing, it was hardly unexpected. Earlier this year I sat down with Julia Forbess a Partner in Fenwick’s capital markets practice to discuss the state of proxy trends going into the 2024 season. These results are consistent with the trends Julia identified. Many shareholders are still adamant about ESG and ESG proposals are unlikely to go anywhere in the long term. However, they will likely not see widespread success unless larger asset managers change their current position.
Our members can read more ESG proposals and proxy votes here.
If you aren’t already subscribed to our complimentary ESG blog, sign up here for daily updates delivered right to you.
