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Shareholders are putting more pressure on companies over environmental and social issues

February 15, 2022, 10:38 AM UTC

Good morning.

I write frequently in this newsletter about the rise in “stakeholder,” as an alternative to “shareholder,” capitalism. But what that framing ignores is that pressure for companies to perform better on environmental and social issues is increasingly coming from the shareholders themselves.

A new report out this morning from The Conference Board and ESG analytics firm ESGAUGE underscores the point. (CEO Daily was given an exclusive early look.) Researchers analyzed proxy proposals in the first half of last year, when 90% of the companies have their annual shareholder meetings, and found those addressing environmental and social issues were up significantly from previous years. Moreover, it’s not just that more proposals are being filed—more of them are going to a vote, and those votes are getting increasing levels of support. Some highlights:

  • Among Russell 3000 companies, 348 proposals were filed on environmental and social issues in the first half of 2021, and 158 were voted on. That’s up from 314 filed and 151 voted in the first half of 2020.
  • Support for those proposals averaged 32% in 2021, up from 28% in 2020.
  • The highest level of average support (69%) was recorded for proposals requiring companies to publicly disclose their workforce diversity data (EEO-1).
  • The second highest level of average support (61%) was recorded for proposals requiring companies to publicly disclose climate-related lobbying.
  • Support for election of directors continued to be at Russian-election levels (94.6%) in 2021, but was down from 94.8% in 2020 and 98% in 2018.
  • The number of directors who failed to receive majority support for election has more than doubled in recent years to 68 last year from 27 in 2018.
  • Scrutiny of executive compensation is also on the rise. In 2021, 57 companies failed to receive majority support. That’s only 3% of all companies, but it’s up from 47, or closer to 2%, the previous year.

The authors of the study expect all of these upward trends to continue in 2022. The study was done in collaboration with Russell Reynolds and Rutgers Center for Corporate Law and Governance and can be found this morning here.

Other news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.

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