Understand proponents, investors and your company’s ESG profile to ensure your board is equipped to respond

We are amidst a paradigm shift with respect to investor support of environmental and socially oriented shareholder proposals, addressing wide-ranging topics such as: emissions reductions targets, pollution, diversity, equity and inclusion, climate transition reporting, political spending, human rights — and the list continues to grow.

In this rapidly evolving landscape, historic voting decisions alone are no longer a clear predictor of future outcomes. Understanding how to respond to shareholder proposals requires holistic evaluation and thorough understanding of the proponent, your investors, and your company’s ESG profile to determine likely voting outcomes and potential paths to settlement. Even if your company seems at low risk for shareholder proposals, it’s important to maintain awareness of the current landscape and how it translates into investors’ evolving expectations, particularly as ESG considerations are increasingly influencing director election determinations.

Expanding and evolving investor expectations

Average support for environmental and social shareholder proposals in the U.S. is increasing dramatically, with environmental proposals accounting for the largest year over year increase. These results indicate that investors’ heightened focus on ESG risks and opportunities, in conjunction with accompanying revisions to proxy voting guidelines, is having a meaningful impact on voting decisions.

It is critical for companies to pay close attention to emerging themes in their region as well as their industry to ensure their ESG strategy is firmly aligned with the evolving investor focus.

Georgeson’s experienced advisors will support you throughout the year, working to mitigate the effects of any unexpected situations. Leverage our decades of experience in understanding how proxy advisors and institutional investors think and act in varying situations — and learn how to counteract any negative developments.

The 2021 U.S. proxy season produced unprecedented results including 787 shareholder proposals submitted throughout the season. Almost half of passing proposals addressed E&S issues. Climate change was the prevailing theme across the vast majority of the 36 environmental proposals that reached a vote, 13 of which passed. Meanwhile, of the 122 socially focused shareholder proposals that went to a vote, 20 passed. The majority of those were related to political spending and diversity-related matters. There were 246 governance proposals that reached a vote, with 38 passing. Most of these were related to majority voting standards and shareholder action by written consent.

Georgeson’s ESG advisory team will support management and the board by delivering:

  • Research into industry trends and topic-specific considerations to inform how to address the proponent and broader shareholders

    Research into industry trends and topic-specific considerations to inform how to address the proponent and broader shareholders

  • Guidance on engaging with proponents and investors to ensure messages are delivered clearly to key decisionmakers

    Guidance on engaging with proponents and investors to ensure messages are delivered clearly to key decisionmakers

  • Support in understanding how institutional investors will respond to a proposal

    Support in understanding how institutional investors will respond to a proposal

  • Overview or deep-dive of current company practices as compared to investor-favored frameworks and standards

    Overview or deep-dive of current company practices as compared to investor-favored frameworks and standards

  • Help drafting targeted correspondence and disclosures in response to proposals

    Help drafting targeted correspondence and disclosures in response to proposals

  • Assistance in engaging with proxy advisory firms

    Assistance in engaging with proxy advisory firms

  • Advice on response to negative recommendations or non-exempt solicitation (“vote no”) campaigns

    Advice on response to negative recommendations or non-exempt solicitation (“vote no”) campaigns

  • Comprehensive shareholder composition analysis to help map out how general policies will impact your company and clarify strategic options available given your particular profile

    Comprehensive shareholder composition analysis to help map out how general policies will impact your company and clarify strategic options available given your particular profile

Proposal preparation: Be ready for ESG proponents

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