August 16, 2013
Shareowner Support for Environmental and Social Resolutions at a Ten-Year High
by Robert Kropp
Jackie Cook of Fund Votes summarizes the 2013 proxy season and notes strong support for shareowner
resolutions across the environmental, social, and corporate governance spectrum.
It wasn't too many years ago when sustainable investors would be happy with just enough support for
a shareowner resolution addressing environmental, social, and corporate governance (ESG) for it to
qualify for the following year's proxy ballot.
Overall, the governance resolutions
gained an average 41% support, down slightly from the ten-year high of 45% in 2009 but still
impressive nonetheless. Of the 326 such resolutions, 88 gained the majority support of shareowners.
Resolutions addressing board declassification and majority votes on resolutions and director
elections all averaged majority support. Also, 64 resolutions were filed requesting an independent
board chair, the highest number ever. The 64 resolutions averaged 32% support, and 77% of Netflix
shareowners voted in favor of an independent chair.
The degree to which the landscape has
changed is made evident by a review of the 2013 proxy season compiled by Jackie Cook of Fund Votes. Cook's Proxy Season Roundup summarizes the votes on 502 resolutions
submitted by shareowners in 2013. Two-thirds address corporate governance concerns, while the
remaining focus on environmental and social issues.
With many mainstream investors
continuing to turn a blind eye to the long-term financial consequences of environmental and social
issues, such resolutions traditionally gain a smaller percentage of shareowner support, and such
was the case again in 2013. But again: the 21% vote in support of such resolutions this year would
have been unthinkable just a few years ago. Furthermore, the percentage represents a ten-year high
for these resolutions.
Fourteen environmental and social resolutions earned at least 40%
shareholder support in 2013, with requests for sustainability reporting that includes greenhouse
gas (GHG) emissions and energy efficiency targets gaining over 40% support. Resolutions requesting
disclosure of political spending and lobbying expenditures attracted significant support as well,
while more than one-third of shareowners at major oil and gas companies supported resolutions
addressing the controversial practice of hydraulic fracturing.
The primary focus of Fund
Votes has been tracking the shareowner voting records of mutual fund companies, and Ceres commissions Cook to report on mutual funds'
voting on an annual basis. Cook's analysis of last year's voting
records delivered some encouraging news, in that three large financial firms—DWS,
AllianceBernstein, and Oppenheimer—supported most shareowner resolutions addressing climate change.
On the other hand, “Six fund families failed to support even a single climate-related
resolution in 2012, including BNY Mellon, Franklin Templeton, ING, Pioneer, Putnam and Vanguard,”
the report reveals.
“Too many mutual fund managers still fail to grasp the risks that
climate change poses to companies they invest in,” said Mindy Lubber, president of Ceres. “US
mutual funds, with their sizeable ownership of domestic corporate stocks, need to consider the
merits of shareholder requests on climate change and formalize their proxy voting guidelines
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