Mutual fund support drives record breaking year for ESG proposals in US

Proxy Preview reveals 34 shareholder resolutions bagged majority support his year, up from 21 last year

This year’s proxy season has seen a record number of ESG-orientated shareholder proposals get majority support in the US, with 34 proposals attracting the support of more than half of investors, compared with 21 the year before. 

The impressive rise was attributed by Proxy Preview to the growing support for such proposals by the “big mutual funds”. 

Proxy Preview is a collaboration between US-based ESG consultant Proxy Impact and 

US non-profits As You Sow and the Sustainable Investments Institute (Si2).

In its latest update on the 2021 proxy season, Proxy Preview revealed that of the 100 or so majority-backed ESG proposals to go to the vote over the last decade, half occurred in the last two years. 

“We are clearly at an inflection point, with the high votes showing that the big mutual funds have joined other large institutional investors in recognising the risks and opportunities posed by environmental and societal concerns,” Proxy Preview said. 

Earlier this year, US SRI firms Mercy Investments and Boston Trust Walden withdrew a proposal at investment behemoth BlackRock over its poor record of supporting ESG proposals. The decision was prompted by signs that BlackRock is shifting to align its voting decisions with its lofty rhetoric on sustainability and climate.

UK campaign group ShareAction also reported in December that some of the US’ biggest asset managers – including JP Morgan, Northern Trust and Wellington – had dramatically ramped up their support for climate proposals in 2020.

Part of the upsurge in support this year is also due to the emerging trend of companies backing ESG proposals ahead of votes. Four of the six resolutions that received more than 90% were supported by management. 

Among this group were the two highest votes of the year so far: the 98.8% support for a report on supply chain deforestation impacts at US food giant Bunge, and 97.9% support for a resolution on net-zero greenhouse gas emissions goals at US conglomerate General Electric.

Another resolution at IBM asking for details on the effectiveness of its diversity, equity, and inclusion practices, which had management’s blessing, received 94.3% support. 

But this does not tell the whole story. Eight proposals with support in the 80% decile, three in the 70s and seven in the 60s were all opposed by management. This category includes the proposal on reducing plastic pollution at chemical firm DuPont, which was backed by 81.2% of investors. 

Proxy Preview identifies “three dominant” ESG categories among the proposals that received majority support: climate change, corporate political expenditures and diversity. 

Proposals focused on lobbying and political spending had the largest proportion of majority votes, with fourteen. The resolution at online streaming giant Netflix on political donations garnered the largest support with 80.6%.

Five Paris-aligned lobbying proposals were also among those to attract majority tallies at oil giants Phillips66 (64%) and Exxon (63%), US freight firm Norfolk Southern Corp (76%) and airliners Delta Air Lines and United Airlines (65%). 

Proposals that touched upon the pandemic and sexual harassment also received more than half support, including 95.2% support – the third highest this year – for a proposal at US fast food giant Wendy’s asking for a report on its efforts to keep staff safe during the pandemic.