Proxy access aiding attention to ESG issues, says Proxy Preview

Mar 08, 2016
<p>Political activity and climate change persist as key areas of focus, with worker welfare and food safety among new concerns</p>

Investor pressure on companies to consider pressing concerns about environmental, social and governance issues is expected to continue to grow in coming year, with support from broader adoption of proxy access by companies, according to new Proxy Preview report released by As You Sow and Proxy Impact.  

After the New York City Comptroller’s Office filed proposals calling for the right of shareholders to nominate and run board candidates, 70 companies adopted proxy access in 2015, and an additional 59 companies are expected to follow suit this year. In his letter at the top of the latest Proxy Preview, As You Sow CEO Andrew Behar noted, ‘The democratization of board nominations promises to have major impacts in years to come on all environmental, social and governance issues.’

While the 370 environmental and social proposals filed as of February 15 is down from the 433 resolutions filed at the same time last year and 417 the prior year, when you include the 72 sustainability resolutions filed by the New York City pension funds requesting proxy access rights, the number is roughly the same as in 2015, according to the report. ((The NYC pension fund resolutions have been directed at companies with high carbon footprints, low levels of board diversity and low investor support for executive pay.) With environmental and sustainable governance proposals together accounting for 40 percent of the total resolutions, up slightly from 2015, the main issues investors will have to consider in this year’s proxy statements remain corporate political activity (98 proposals) and climate change (94 proposals).

New requests in 2016 shareholder resolution include urging utilities to increase the use of renewable energy, while attention continues to be paid to concerns over fossil fuel producers’ valuations if governments follow through with promises they made at the December 2015 climate treaty talks in Paris and enact restrictions on these companies burning their products, the report said. In addition, some of the 98 political activity proposals are linking inaction about climate change to corporate lobbying and election spending.

Among the environmental issues covered in some proposals are concerns about the presence of toxic nanomaterials in snack foods and religious investors’ concerns about the water impacts of chicken processing companies. The social issues under consideration in this year’s resolutions include concerns about safe working conditions and fair pay and concerns over the national opoid epidemic has spurred a new resolution by As You Sow asking three drug manufacturers to launch prescription drug take-back programs to reduce the adverse environmental impact of medical waste.

Continuing investor pressure about money spent on lobbying has ‘helped prompt Wal-Mart Stores to start releasing state-by-state lobbying expenditure information, which might produce similar disclosure from others,’ according to the report.

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