Investors File Record Number of ESG-Related Resolutions

A record number of climate-related shareholder resolutions have already been filed in 2024 for the annual meetings of North American companies, Reuters (subscription) reports.

What’s going on: Investors and activists have filed 263 environmental, social and governance resolutions since the start of the year, according to a tally out Tuesday from sustainability nonprofit Ceres.

Companies saw a spike in ESG proposals after the Securities and Exchange Commission “made it easier for ESG resolutions to reach corporate ballots in late 2021.” Shareholder proposal submissions are now at an all-time high.
“Proposals related to climate and other environmental topics account for the largest share of ESG proposals tracked by the Sustainable Investments Institute.”

The background: The NAM has long raised concerns about the increasing politicization of corporate proxy ballots.

The NAM strongly opposed the SEC’s decision in November 2021 to require companies to allow a vote on any proposal raising a policy issue with “broad societal impact”—irrespective of its relevance to the individual business.
In May 2023, the NAM took the SEC to court, filing a motion to intervene to challenge the SEC’s authority to force manufacturers to weigh in on divisive social and political issues unrelated to their businesses.

Pushback on the Hill: NAM Managing Vice President of Policy Chris Netram testified before the House Financial Services Committee on the impact that these proposals have on manufacturers.

“Turning the proxy ballot into a debate club diverts time and resources away from shareholder value creation and forces companies to wade into controversial topics over which they have no control,” said Netram. “Congress must prevent the SEC from forcing companies to include irrelevant proposals on their ballots.”

What’s next: Proposed SEC reforms to further open up the proxy ballot to activists—also opposed by the NAM—could be finalized this year.

The NAM participated in oral arguments before the Fifth Circuit Court of Appeals in early March, arguing that the SEC’s approach violates manufacturers’ First Amendment rights. A decision could come later this year.