• Record Proposals: ESG and anti-ESG shareholder proposals hit an all-time high in 2024, but support remains mixed.
• Divergent Support: ESG proposals have increased, but support for environmental and social issues has declined.
• Anti-ESG Trend: Anti-ESG proposals have surged but continue to garner minimal support.

In 2024, shareholder proposals on ESG and anti-ESG issues soared to record numbers, reaching 998 among Russell 3000 companies, surpassing 2023’s total of 947. Despite the increase, support remains inconsistent, reflecting the complex landscape CEOs and boards must navigate.

Governance consulting firm Georgeson’s Early Proxy Season Review reveals contrasting trends. ESG proposals rose by 18% compared to 2023, while anti-ESG proposals saw a 19% increase from 2023 and a staggering 90% from 2022. However, average support for anti-ESG proposals has dwindled to 2.8%, indicating limited shareholder endorsement.

Mixed Support for ESG

Support for ESG proposals shows a nuanced picture:

• Governance-related ESG proposals: Increased by 18% with rising support.
• Environmental and social proposals: Declined by 6% and 5%, respectively, since 2023.

“Boards need to identify which ESG areas require focus based on their industry and shareholder priorities,” advises the Georgeson report. For instance, energy companies may prioritize environmental issues, while social issues may vary by organization.

To effectively manage ESG and anti-ESG issues, boards should:

1. Monitor Anti-ESG Sentiment: Engage with shareholders to understand the motives behind anti-ESG proposals and address concerns early.
2. Respond to Growing ESG Support: If specific ESG issues gain increasing support, boards should consider reassessing their stance and potentially surveying shareholders for broader opinions.
3. Prioritize Governance Proposals: Given the rising support for governance-related ESG proposals, boards must demonstrate strong governance practices to satisfy shareholder expectations.

Related Article: Tokyo Gas Cuts Shareholder Returns to Invest in Decarbonization

In conclusion, while anti-ESG sentiment appears to be growing, boards must continue dedicating resources to ESG concerns to maintain alignment with shareholder interests and mitigate potential backlash.

The 2024 proxy season data, gathered from annual meetings of Russell 3000 companies held from July 1, 2023, to May 17, 2024, provides insights into shareholder proposal trends. The report categorizes proposals based on their primary focus, considering environmental, social, and governance (ESG) issues. Data collection and categorization efforts were thorough, ensuring a comprehensive analysis of the evolving shareholder landscape.