This month, shareholder advocacy organization As You Sow released its 10th annual Proxy Preview report, detailing the record-breaking 433 social and environmental shareholder resolutions filed so far this proxy season, with political spending and climate change driving most of the activity.
“This year we have once again broken the record on the number of resolutions filed, and this year’s proponents have escalated the connection of critical issues to the boards of directors by demanding that shareholders be enabled to nominate board candidates and continue to link executive pay with sustainability,” said As You Sow CEO Andrew Behar. “This is a systemic critique, pointing out how the board must accept responsibility for excessive political spending, inadequate energy policy, our changing climate, toxic hazards and human rights abuses.”
Proxy Preview documents investors’ demand for more disclosure of corporate political spending before and after elections; these resolutions account for over a quarter of the total. Proposals on climate change, energy and their related risks — as well as interconnected questions about corporate sustainability strategies and transparency — have also grown, and account for nearly 40 percent of the 433 resolutions filed to date. Human rights and diversity on boards and in the workplace make up most of the rest.
“The flood of corporate political activity proposals continues unabated, and not just about elections,” said Heidi Welsh, executive director of the Sustainable Investments Institute (Si2) and co-author of the report. “A broad coalition of investors wants companies to tell stockholders and the public more about so-called ‘dark money’ spent both in campaigns and on lobbying by groups that use corporate money and don’t say where it comes from,” added Welsh.
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Resolutions on climate change and environmental issues are the largest category of proposals filed. “Shareholders are actively looking to manage climate risks,” says Michael Passoff, CEO of Proxy Impact and co-author of the report. “Most of the climate resolutions ask companies to reduce greenhouse gas emissions or to report on the risks from climate change on business operations. Investors in fossil fuel companies are especially concerned about how their businesses can succeed in a low-carbon economy. There is a growing alarm about the inevitability of stranded carbon assets and the potential of a carbon bubble.”
Proxy Preview 2015 is the 11th edition of the report hailed by the Chicago Tribune as the “Bible for socially progressive foundations, religious groups, pension funds, and tax-exempt organization.” The report assesses shareholder resolutions, how companies are responding, and policy changes affecting the proposals at the Securities and Exchange Commission (SEC).
Highlights of the 2015 Shareholder Resolutions:
- Political spending: Slightly fewer proposals have been filed so far on corporate political activity this year — 113 compared with 126 in mid-February 2014, but the total will likely grow with additional filings. Proponents of more disclosure about election spending have yet to see any substantive response from the SEC on a proposed formal rulemaking that could compel more transparency even though it has attracted more than 1.2 million comments. The key sticking point is still the lack of transparency about spending by intermediaries such as trade associations, a central focus of all the proposals.
- Climate change: Climate change proposals are continuing to increase, with 76 resolutions asking for more carbon accounting and related risk management — up from 66 at this point in 2014. Investors also want to hear more about how companies measure and manage methane releases from expanded U.S. domestic energy production, which often uses hydraulic fracturing. Proponents also are asking how energy companies will cope with a potential drop in fossil fuel demand and how they can justify the high capital expenditures needed for unconventional fossil fuel extraction. Deforestation is addressed in roughly a dozen proposals, with proponents increasingly linking ecological concerns and human rights — for palm oil and other agricultural commodities.
- Diversity: 17 resolutions seek formal protections for lesbian, gay, bisexual and transgender (LGBT) employees but half the targeted companies already have agreed to these requests — including longtime holdout ExxonMobil, which changed its policy after more than a decade of proposals. Three more resolutions from the New York City Comptroller’s Office also ask about racial breakdowns. In addition, nearly two dozen from The Thirty Percent Coalition seek greater board diversity.
- Human and labor rights: Members of the Interfaith Center on Corporate Responsibility and trade unions are pressing forward with requests for human rights risk assessments, having gained traction last year with this approach. Other resolutions address the recruitment fees tobacco workers pay in the U.S., the Holy Land Principles, lethal injection drugs, and pay disparity and structural inequality.
In other As You Sow news, the organization recently convinced Dunkin Donuts to stop using nanomaterials in its donuts, and released a report on the leaders and laggards in packaging recyclability, pushing the food and beverage industry to improve their materials and protocols.