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ESG in United States: Lessons from the 2023 Proxy Season and Trends for 2024.

Today is Wednesday, September 20, 2023.


Proxy season is the time between mid-April to mid-June when most large publicly traded companies host their annual meeting, and when the shareholders go over the company's financial performance and then vote on issues stated on the proxy voting card. (source: Toppan Merrill).


In terms of Environment, Social and Governance, what is being proposed in these meetings? What are the outcomes? And trends?


Last September 14, Carbon Credit Markets attended a great webinar titled "Lessons from the 2023 Proxy Season and Trends for 2024" hosted by the global law firm Sullivan & Cromwell (S&C), analysing over 800 shareholder proposals, covering about 90% of all public listed companies in United States.


Here some highlights:

(1) "sharp shift away from governance and toward social and political issues";

(2) 65% increase in anti-ESG proposals (256% compared to 2021) despite continued low support;

(3) Environmental proposals increase by 8%; average support declines meaningfully and only 2 pass (vs. 14 in H1 2022); and

(4) Governance proposals decline by 13%; average support drops to 29% and pass rate declines by 39%.


Details of the proposals and explanations of the topics are elaborated in S&C's report.


Here is the "average support" for some topics (comparing with 2022).


SOCIAL

- Civil Rights, Human Rights, Racial Justice: down to 14% (from 28%); (There is an interesting chapter in the report titled "Racial equity / civil rights audits");

- Political Spending / Lobbying: down to 24% (from 31%).


GOVERNANCE

- Supermajority: down to 54% (from 72%);

- Dual Class: up to 34% (from 31%);

- Board Diversity / Skills: up to 33% (from 15%).


About ENVIRONMENTAL issues, refer to the image below.


"In a year where anti-ESG stakeholders focused on environmental topics (for example, companies’ net zero goals and related impact on the fossil fuel industry) it is not surprising that anti-ESG proponents brought a meaningful number of proposals in this category".


Click at the image below for the S&C full report. Recording and great slides of the webinar are also available.


There was an interesting case mentioned at the webinar. A well know global asset management company that had to replace (upon legal demand) the expression "Environmental and social issues" for "Material sustainability-related issues and opportunities".





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 CARBON CREDIT MARKETS

“Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”

“I am among those who think that science has great beauty”

Madame Marie Curie (1867 - 1934) Chemist & physicist. French, born Polish.

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