Shareholders Demand Social and Environmental Resolutions

Oct 22nd, 2011 | By | Category: Climate Change

Support for corporate responsibility proposals rose in the 2011 proxy season according to a recent report, Shareholders Press Boards on Social and Environmental Risks, issued by Ernst & Young.[1] For the second year in a row, resolutions focusing specifically on social and environmental issues comprised the largest portion of all shareholder proposals that came to a vote. This year, they constituted 40 percent of all such resolutions, up from 30 percent last year.

Resolutions related to the environment represented one-third of proposals on social and environmental issues this year. Most of the resolutions called on companies to issue sustainability reports or to provide greater disclosure about the economic risks associated with climate change.

At the beginning of the 2011 proxy season, Ernst & Young estimated that the proportion of social and environmental resolutions would reach 50 percent of all shareholder proposals. The actual proportion that came to a vote was 40 percent, owing partly to a higher than expected number of submitted proposals that were later withdrawn by proponents. Many resolutions were withdrawn following substantive action by the relevant companies as both sides reached agreement on how best to achieve corporate responsibility goals. The withdrawals therefore represent a significant level of success that is not captured in the voting data.

The trend of increased voting support and investor attention indicates to some extent why companies may be open to reaching agreement with shareholders. For example, of the nine proposals on hydraulic fracturing submitted this season, half were withdrawn because of company action. The remaining proposals received very high levels of support, averaging more than 40 percent of votes cast; one resolution won support from 49.5 percent of votes cast.

About the Author

This article was written by Steve Starbuck and submitted by Jim Haried.  Steve Starbuck is a Partner at Ernst & Young, where he is the Americas leader for climate change and sustainability services. Jim Haried is a senior manager in the Chicago office of Ernst & Young.

Photograph: Wind Power HDR by John Nyberg, Copenhagen, Denmark.

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[1] Proposal data for 2011 is based on meetings through 30 June, while voting results are available for meetings through 15 June. Data for prior years reflects full year. “Votes cast” is defined as votes for and against; abstentions, which would lower the level of support indicated, are not included. DataSource is Ernst & Young’s corporate governance database, which is based on SEC filings.

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