Stakeholder Engagement

Stakeholder Engagement Research & Trends

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A new record of over 500 ESG-related shareholder resolutions were submitted to corporations this Annual General Meeting (AGM) season. Notably, the SEC upheld just 19% of requests from companies to block resolutions, compared with between 43% and 54% over the past four years. Topics include calls for science-based emissions targets, requests for audits of fossil fuel financing and civil/human rights and equity concerns, and disclosure regarding fair distribution of Covid-19 vaccines and animal welfare in supply chains. Shareholders also considered calls to oppose proposed directors who have failed to act on key ESG concerns. Votes on 2022 shareholder resolutions, which began in January and continue into June, can be tracked in real time using the ProxyMonitor Score Card. Highlights so far include (May 2022):

• Resolutions calling on major banks to end support for new fossil fuel development garnered meaningful support, with shareholders at Citi, Bank of America, and Wells Fargo voting in favor at 12.8%, 11%, and 11%, respectively. While shareholder proposals are not binding, those receiving 5% or more are eligible for refiling, and those receiving at least 10% are generally taken very seriously.
• For the first time, Institutional Shareholder Services (ISS) countered major oil company assertions about already meeting GHG emission targets consistent with the Paris accord. ISS recommended yes votes on related proposals to Occidental Petroleum and Valero Energy, according to investor reports seen by Bloomberg. ISS is considered likely to issue the same recommendation for eight other oil companies.
• Bloomberg reports that BlackRock, Vanguard and State Street Global Advisors have indicated they will vote against directors that fail to act on issues like workforce diversity and climate change, considering them “financially material.” (May 2022)

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UBS — Received 77.4% approval in a shareholder vote on its interim-target roadmap toward net-zero emissions by 2050. The approval rate was the lowest for any of the proposals put to a vote at the company’s annual general meeting. Critics noted that the plan does not account for more than 50% of the bank’s lending portfolio. (April 2022)

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BARCLAYS — A founder of the Net-Zero Banking Alliance, Barclays will give shareholders an opportunity to endorse its updated climate strategy and targets at the company’s May 2022 Annual General Meeting. It released a “Climate Strategy, Targets and Progress” report last week outlining plans to (March 2022):

• Set 1.5°C-aligned 2030 targets to reduce financed emissions across four of the highest-emitting sectors in the portfolio: Energy, Power, Cement and Steel.
• Incorporate methane into methodology used for measuring greenhouse gas (GHG) emissions for the energy sector.
• Update its restrictive policies, in particular setting final exit dates with respect to the financing of thermal coal mining and coal-fired power generation.
• Update targets to reduce operational emissions including a 90% reduction in GHG emissions across Scopes 1 and 2 by 2025 and 100% of renewable electricity procured by the end of 2025.
• Align executive pay with performance against climate and sustainability commitments.

Barclays | Report

Shareholder advocacy group  As You Sow, the  Sustainable Investments Institute (Si2), and  Proxy Impact released a new “Proxy Review 2022” report on ESG trends in corporate proxy proposals. It finds that a record 529 shareholder resolutions on ESG issues have been filed for the 2022 proxy season—over 20% more than last year. Resolutions on climate change, racial justice, and decent work have risen, while those related to sustainable corporate governance have fallen dramatically. (March 2022)

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2022 Proxy Season Preview and Shareholder Voting Trends (The Conference Board, ESGAUGE, in collaboration with Russell Reynolds Associates and the Rutgers Center for Corporate Law and Governance) — Identifies key trends for the 2022 proxy season and recommends ways for CEOs and management teams to prepare their boards. Key ESG findings (Feb 2022): 

• Companies should expect more E&S proposals to be filed across all industries, go to a vote, and receive high levels of support, including proposals on racial equity/civil rights audits.
• Among Russell 3000 companies, shareholders filed 348 proposals on E&S issues in the first half of 2021 and voted on 158—up from 314 filed and 151 voted on in the first half of 2020.
• Support for E&S proposals averaged 32% in 2021, up from 28% in 2020.
• Proposals that would require companies to publicly disclose their workforce diversity data (EEO-1) and publicly disclose climate-related lobbying received the highest levels of average support (69% and 61%, respectively).
• Companies were less able to negotiate a withdrawal of environmental proposals than in the 2020 proxy season.

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COSTCO — 69.9% of shareholders at Costco’s annual meeting voted in favor of a Green Century Funds proposal requesting that the company set science-based GHG emission-reduction targets. According to Ceres, this is the first shareholder vote on a proposal that directly asks a company to set targets that are aligned with net zero by 2050 and incorporate emissions from its full value chain. (Jan 2022)

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US companies filed 84 climate-related shareholder resolutions during the proxy season that ended June 30—up from 77 in 2020, according to a new Institutional Shareholder Services report. The proposals saw 48.9% median support, up from 37.6% in 2020. (Sept 2021)
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The 2021 proxy season has seen a historic 34 majority votes for disclosure and action around ESG shareholder resolutions, up from a record 21 last year, with top votes going toward political spending, climate and environment, diversity, sexual harassment, COVID-19, and racial justice, according to Proxy Review. (July 2021)
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The State of Community Management 2021 (The Community Roundtable, June 2021) — Explores the state of the community management industry and provides strategic ideas and tactical benchmarks for successful engagement. The report examines three key findings in detail:

• Executive interest and engagement have increased dramatically
• The strategic maturity of online communities has improved significantly
• Community maturity correlates to increased value

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A majority of Delta’s shareholders voted in favor of the company disclosing its climate lobbying efforts, according to Reuters. (June 2021)
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35% of Amazon’s shareholders voted for a proposal to disclose its plastics footprint and strategies to reduce single-use plastics in its packaging. (June 2021)
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ExxonMobil had a 3rd board member replaced with a new director nominated by climate activist investment group Engine No. 1. The governance change follows an extended vote count from its annual shareholder meeting last week. (June 2021)
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61% of Chevron shareholders supported a resolution requiring the company to reduce Scope 3 emissions from the use of its products, although a specific target was not specified. Two additional proposals nearly passed: (1) 48% voted to require the company to disclose how its business would impact a 2050 global net-zero scenario, and (2) 48% voted for more in-depth disclosure of its lobbying activities. (May 2021)
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ExxonMobil shareholders voted against management to replace two board members with new directors nominated by climate activist investment group Engine No. 1. The nominated candidates earned the support of some of ExxonMobil’s largest shareholders, including BlackRock, Vanguard, and State Street. (May 2021)
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59.4% of American Express shareholders supported a proposal opposed by its Board of Directors requiring the company to publish an annual report assessing its diversity and inclusion efforts. (May 2021)

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88.7% of Royal Dutch Shell shareholders backed the company’s energy transition strategy to reduce carbon emissions to net-zero by 2050. 30.47% of shareholders voted for a second resolution urging the company to set “inspirational” GHG reduction targets, up from 14.4% for a similar resolution last year. (May 2021)

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A record 30 shareholder resolutions focusing on diversity, equity, and inclusion—including racial audits—are on the ballots at upcoming annual company meetings, according to data compiled by Bloomberg Intelligence. As of April 15th, social resolutions (92), including worker pay and scrutiny of supply chains, have outpaced governance (43) and environmental (30) proposals. (May 2021)

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Over 99% of Unilever shareholders voted in favor of the company's "climate transition action plan" to achieve net-zero across its supply chain by 2039. (May 2021)

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81% of Dupont shareholders voted for a proposal opposed by management, requiring it to report on spills of plastic pellets that are released into the environment. It was the highest vote ever for an environment-related shareholder resolution opposed by management. (May 2021)

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“Top 10 Stakeholder Engagement Trends of 2017” (Future 500, 2018) highlights 10 social, environmental or economic trends that could shape corporate stakeholder engagement strategy in 2017 and beyond. The report also serves as a corporate “field guide,” highlighting opportunities for cross-sector engagement to advance solutions that protect our oceans, forests, and climate. 

Investor Engagement

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“Change the Conversation: Redefining How Companies Engage Investors on Sustainability” (Ceres, 2019) offers nine recommendations, outlined under three strategies, to help companies improve investor engagement on ESG issues.

“Method of Production of Long-Term Plans” (CECP, 2019) offers decision-making guidance for corporations seeking to deliver a long-term strategic plan to investors. The research is based on insight from leading Investor Relations and Corporate Responsibility officers that have been involved in the process of presenting a long-term plan at a CEO Investor Forum. 

Stakeholder Assessment & Engagement

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EcoVadis Academy (EcoVadis) — A new e-learning platform offers EcoVadis customers guidance for enhancing their practices and performance across environment, ethics, labor and human rights, and sustainable procurement. The platform is “adaptable to each customer’s sustainability journey,” allowing companies to assign and monitor coursework to drive suppliers’ improvement. (Nov 2021)
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Ceres Roadmap for Sustainability (Ceres) outlines 20 sustainability criteria Ceres believes companies must meet to stay competitive in the 21st century. The roadmap covers four areas: governance, stakeholder engagement, disclosure, and performance. 

“Common Threads: Designing Impactful Engagement” (SustainAbility, 2018) offers guidance to help companies better engage their external stakeholders, address their material issues, and strengthen their business strategies. The report lays out best practices for strategic engagement, measuring and demonstrating impact, and targeting consumers and customers.