Shareholder Support Drops as ESG Proposals Get More Political

The average support for proposals on racial equity audit, reproductive rights, and mandatory employee arbitration has decreased by over 10 percentage points, according to Georgeson.


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Environmental, social, and governance proposals have surged this proxy season, but proponents of these initiatives may be disappointed at how many have passed.

In its most recent report, proxy solicitor and advisory firm Georgeson says investor support may be declining because the proposals are increasingly centered on issues that are caught in the cross hairs of politics, including abortion.

“Investors have shown a decreasing level of support for ESG proposals as they become more specific and focused on the impact of environmental, societal, and political issues, including board and workforce diversity, political spending, and reproductive rights,” the report said.

The number of ESG proposals submitted in the current proxy season reached 951 as of May 15, already surpassing the total submission count of 941 in 2022, according to Georgeson. The report is based on an analysis of annual proxy meetings for companies in the Russell 3000 index.

Despite the rising number of ESG proposals, there has been a decline in support for the initiatives. As of May 12, only 24 proposals garnered majority support, compared to 48 proposals during the same period last year, according to the report.

Environmental and climate proposals passed at an average rate of 26 percent in 2023, down from 38 percent in 2022, according to Georgeson. Institutional Shareholder Services and Glass Lewis, the two largest proxy advisors, may have contributed to the decrease. “One factor contributing to dampened support may be that the environmental proposals in the 2023 season have seen significantly less support from both ISS and Glass Lewis. “FOR” recommendations on environmental proposals of all kinds have decreased by roughly 8 and 10 percentage points for ISS and Glass Lewis respectively,” according to Georgeson.


In 2022, ISS voted in favor of 72 percent (on behalf of their shareholders) of such proposals, but this figure has dropped to 65 percent this year. Similarly, Glass Lewis voted in favor of proposals at a rate of 47 percent in 2022, down from 35 percent in 2023, according to the report.

Support for social proposals has also dropped, from an average of 26 percent in 2022 to 20 percent in 2023. Only three social proposals have received majority support year-to-date, compared to nine last year. “Support across nearly all social proposal themes is down, with average support for racial equity audit, reproductive rights, and mandatory employee arbitration decreasing by over 10 percentage points,” the report said.

As for governance proposals, the average support increased slightly from 30 percent in 2022 to 31 percent in 2023. But none of the proposals have received majority support year-to-date, according to the report. Governance proposals included separating the roles of board chair and CEO, improving transparency in compensation, and optimizing the composition of boards.

The report also noted anti-ESG proposals are increasing, accounting for more than 9 percent of all shareholder proposals in 2023, up from 5 percent last year. Social topics in the anti-ESG category have seen the highest increase, with a 46 percent rise in submissions from 2022 to 2023. But only 6 percent of anti-ESG proposals have passed, lower than the rate for all ESG proxies.