The 2022 US Proxy Season: Emerging ESG-related matters in the US market and what it portends for 2023
Insights

The 2022 US Proxy Season: Emerging ESG-related matters in the US market and what it portends for 2023

US Proxy Season 2022

This past proxy season was touted as one for the ages vis-à-vis volume of ESG-related proposals. It did not disappoint. According to Georgeson, over 900 ESG-related proposals were filed for proxy season 2022. Of those, over 600 were placed on annual general meeting (AGM) dockets, compared to roughly 400 in 2021.

A more recent review conducted by the Sustainable Investments Institute (Si2) narrowed their definition to environmental, social, and sustainable governance proposals. Si2 found that 282 of these proposals came to a vote during the 2022 proxy season, also a record (as defined).

Irrespective of how ESG may be defined, the market witnessed a 50-60% increase in ESG-related shareholder proposals at USlisted companies when compared to 2021. That’s remarkable – but it wasn’t completely unexpected. Setting aside the obvious steady inflows and increased appetite for ESG- or sustainabilitylinked investment and engagement strategies, the Division of Corporation Finance at the US Securities and Exchange Commission (SEC) released Staff Legal Bulletin (SLB) No. 14L in November of 2021. The result of SLB 14L was that a greater number of ESG-related proposals succeeded in making their way onto issuer ballots for 2022.1

In addition to the record number of ESG-related proposals that were filed, the market saw a notable sum of resolutions receive majority shareholder support. Moreover, an unprecedented number of companies chose to recommend support (or offer no opinion) regarding how shareholders should vote on environmental-related proposals. 34 ESG-related proposals received majority vote totals. Although that compares to a roughly 13% year-over-year decrease, it’s the second-highest number of majority votes ever recorded. Although environmental- and social[1]related proposals saw increased levels of majority support, this did not make up for the precipitous 67% year-over-year drop in majority-supported political expenditure and lobbying proposals.

A record number of ESG-related shareholder proposal were also withdrawn. More than half were settled in some form prior to the AGM vote, thus signalling its extraordinary effectiveness as a tool in moving companies forward on ESG matters.

Lastly, we saw E&S-related activism via multiple channels beyond the shareholder proposal course of action. For example, Carl Icahn filed proxy contests with E&S-related matters as the primary focus (McDonald’s) and tertiary foci (Kroger and, to a lesser extent, Southwest Gas). To note, Mr. Icahn was able to extract a Cooperation Agreement at Southwest Gas but failed to garner support at McDonald’s, likely triggering his withdrawal at Kroger. Furthermore, shareholder advocacy groups such as Majority Action, As You Sow, and SOC Investment Group continued to file a record number of ESG-related ‘vote-no’ campaigns and attendant solicitations in support of proposals.

Looking ahead to 2023’

Rather than submit a comprehensive review of proposals that dominated the 2022 proxy season, we instead highlight themes assessed in H1 2022 that we believe will gain prominence – or, in some cases, further prominence – during the 2023 proxy season.

 

Download the ESG Viewpoint

Discover our thoughts for the 2023 proxy season

 

1 SLB 14L was issued with the intent to “streamline and simplify [the SEC’s] process for reviewing no-action requests, and to clarify the standards staff will apply when evaluating these requests.” A no-action request is submitted to the SEC by an issuer to obtain acceptance (or rejection) concerning the company’s wish to exclude a shareholder proposal from the AGM ballot. In effect, SLB 14L removed interpretive barriers from the now rescinded SLB Nos. 14I, 14J and 14K that had resulted in issuers prevailing on various ESG-related no-action proceedings via “ordinary business” and “economic relevance” exclusion rationales.
1 September 2022
Andrew Droste
Vice President, Responsible Investment
Share on twitter
Share on linkedin
Share on email
Key topics
Related topics
Listen on Stitcher badge
Share on twitter
Share on linkedin
Share on email
Key topics
Related topics

PDF

The 2022 US Proxy Season: Emerging ESG-related matters in the US market and what it portends for 2023

Important information

For professional investors

For marketing purposes. Your capital is at risk. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Not all services, products and strategies are offered by all entities of the group. Awards or ratings may not apply to all entities of the group. This material should not be considered as an offer, solicitation, advice, or an investment recommendation. This communication is valid at the date of publication and may be subject to change without notice. Information from external sources is considered reliable but there is no guarantee as to its accuracy or completeness. In the UK: Issued by Threadneedle Asset Management Limited, No. 573204 and/or Columbia Threadneedle Management Limited, No. 517895, both registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.

Related Insights

21 September 2022

Andrew Droste

Vice President, Responsible Investment

Kirsty Nicholson

Impact Reporting Analyst, Responsible Investment

ESG Viewpoint – Should ‘doing good’ pay out? Linking executive pay to ESG metrics

ESG metrics in pay matter. We explain why, outline our expectations for companies in this area and detail our engagement efforts and the progress made.
Read time - 9 min
14 September 2022

Sacha El Khoury

Director, Portfolio Manager

Capital with purpose – impact investing in listed equities

Our Global ESG Equities Team argue the case for making a positive difference through investment in public equities.
Read time - 5 min
5 September 2022

Fixed Income Desk

In Credit - Weekly Snapshot

In Credit Weekly Snapshot – September 2022

Our fixed income team provide their weekly snapshot of market events.
Read time - 3 min

You may also like

Investment approach

Teamwork defines us and is fundamental to our investment approach, which is structured to facilitate the generation, assessment and implementation of good, strong investment ideas for our portfolios.

Funds and Prices

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Our Capabilities

We offer a broad range of actively managed investment strategies and solutions covering global, regional and domestic markets and asset classes.

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.