Shareholders are putting more pressure on companies over environmental and social issues

I write frequently in this newsletter about the rise in “stakeholder,” as an alternative to “shareholder,” capitalism. But what that framing ignores is that pressure for companies to perform better on environmental and social issues is increasingly coming from the shareholders themselves.

A new report out this morning from The Conference Board and ESG analytics firm ESGAUGE underscores the point. (CEO Daily was given an exclusive early look.) Researchers analyzed proxy proposals in the first half of last year, when 90% of the companies have their annual shareholder meetings, and found those addressing environmental and social issues were up significantly from previous years. Moreover, it’s not just that more proposals are being filed—more of them are going to a vote, and those votes are getting increasing levels of support. Some highlights:

• Among Russell 3000 companies, 348 proposals were filed on environmental and social issues in the first half of 2021, and 158 were voted on. That’s up from 314 filed and 151 voted in the first half of 2020.
• Support for those proposals averaged 32% in 2021, up from 28% in 2020.
• The highest level of average support (69%) was recorded for proposals requiring companies to publicly disclose their workforce diversity data (EEO-1).
• The second highest level of average support (61%) was recorded for proposals requiring companies to publicly disclose climate-related lobbying.
• Support for election of directors continued to be at Russian-election levels (94.6%) in 2021, but was down from 94.8% in 2020 and 98% in 2018.
• The number of directors who failed to receive majority support for election has more than doubled in recent years to 68 last year from 27 in 2018.
• Scrutiny of executive compensation is also on the rise. In 2021, 57 companies failed to receive majority support. That’s only 3% of all companies, but it’s up from 47, or closer to 2%, the previous year.

The authors of the study expect all of these upward trends to continue in 2022. The study was done in collaboration with Russell Reynolds and Rutgers Center for Corporate Law and Governance and can be found this morning here.

Other news below.

Alan Murray
@alansmurray
[email protected]

TOP NEWS

Russian intentions

European stocks and U.S. Futures have responded positively to news that Russia is pulling back some troops from the Ukraine border. Russia says the troops have completed drills and are going back to base. On the other hand, the U.K. Says Russia is also sending 14 more battalions to the potential front, and the U.S. Is still publicly revealing apparent Russian schemes to destabilize Kyiv, so Ukrainian skepticism about today's announcement is merited. Financial Times

COVID protests

Justin Trudeau's administration has invoked Canada's Emergencies Act for the first time in the country's history, to deal with the "Freedom Convoy" protests against COVID restrictions. Among other things, the move allows financial institutions to freeze or suspend financial accounts that are being used to fund or further the "illegal blockades and occupations." Toronto-Dominion Bank has already frozen two such accounts. Coins2Day

School closures

Levi's brand president Jennifer Sey has quit her job so she can be more outspoken in her advocacy against COVID-related school shutdowns. The company apparently told her she could be the next CEO if she stopped talking about the issue in public, before telling her she had no long-term future there. She says she turned down a $1 million severance package because it came with a non-disclosure agreement. Coins2Day

Avocado pause

The U.S. Suspended avocado imports from Mexico on Super Bowl eve, after a U.S. Official received a threatening call to his official cell phone. The U.S. Department of Agriculture Animal and Plant Health Inspection Service is now trying to assess whether they can keep personnel working safely in Michoacan, the only Mexican state that's authorized to export avocados to the U.S. Coins2Day

AROUND THE WATERCOOLER

Musk charity

Elon Musk donated more than 5 million Tesla shares, worth around $5.7 billion, to charity in November. It's one of the biggest charitable gifts that's ever been made. Coins2Day

Space debris

Astronomer Bill Gray, who previously said a chunk of a SpaceX Falcon 9 booster rocket was going to crash into the moon, has recanted and now says the offending object is a booster from a Chinese rocket that was sent to the moon in 2014. Bloomberg

Inflation explanations

Johns Hopkins economics professor Steve Hanke doesn't buy the Fed's theory that the current inflation wave is all down to supply-chain bottlenecks. The monetarist's take: "The current trend can only be explained by one force, an explosion in the money supply exceeding anything we’ve seen since World War II." Coins2Day's Shawn Tully: "If Hanke’s correct, the U.S. Is facing at least two more years of gigantic price increases regardless of when the blockages ease." Coins2Day

Trump accounts

Donald Trump's accountants say they no longer stand behind the financial statements they helped prepare for his organization between 2011 and 2020. Mazars say the documents should no longer be relied upon due to the "totality of circumstances" as opposed to "material discrepancies." The firm also won't be working with the former president's company anymore, partly because of a civil investigation into its affairs. Financial Times

This edition of CEO Daily was edited by David Meyer.