Wrapped up in the rise of values-aligned investing and stakeholder capitalism is an increase in active ownership. One way to measure this rise is in the vote totals in support of shareholder resolutions on environmental and social issues. These totals demonstrate that more institutional investors are voting in favor of shareholder resolutions and (mostly) in opposition to the recommendations of company management.
Proxy season lasts from April through May, when most companies hold their annual meetings. Among US company meetings through June 30, we have seen 34 votes with a majority of shares supporting the resolution, shattering last year’s record of 21.1 Fully half of those resolutions garnered 70% or more support, compared to two resolutions a year ago. Prior to 2018, shareholders saw one or two majority votes each year—let alone votes in support exceeding 70%.
Source: ProxyPreview.org.
Diversity and climate change are the two most common topics for shareholder resolutions, and similarly, they make up half of the majority votes. Resolutions requesting disclosure of lobbying and/or election spending, however, have been prevalent for more than a decade and are even more likely to record a majority vote.2
Other ballot items have also seen increased votes against company management. The failure rate for advisory CEO compensation votes (Management Say-On-Pay) has been 4.2% YTD, double last year’s rate of 2.1%.3
The Role of Aperio Clients
Examples of resolutions that received a majority vote include several filed by Aperio clients:
81% of DuPont shareholders supported a resolution asking for a report on plastic pellets’ contribution to ocean plastic pollution. This vote is the highest ever shareholder vote on an environmental resolution opposed by company management.
98% of General Electric shareholders supported a resolution calling on the company to disclose its plans to achieve net-zero greenhouse gas emissions across all its businesses. GE’s board supported the resolution, a traditionally rare occurrence that is becoming more common.
The General Electric example is part of a larger trend of company management publicly recommending that shareholders vote in favor of shareholder resolutions on their proxy ballots (which leads to 95%–99% support). Historically, this has been rare in the US.
We would be remiss to conclude without commenting that the most successful shareholder resolution is one that can be withdrawn because an agreement was reached with the company. Examples of successfully withdrawn resolutions also include some that were sponsored by Aperio clients:
The six largest US banks (Bank of America, Wells Fargo, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup) agreed to achieve net-zero greenhouse gas emissions for their financing activities by 2050.
Target Corp. committed to reducing annual total virgin plastic in its owned brand packaging by 20% by 2025. As You Sow, the shareholder advocacy group that organized the resolution sponsored by our clients,4 reached similar agreements with Keurig Dr. Pepper, Mondelez, PepsiCo, and Walmart.
Seven companies agreed to disclose diversity data (with some agreements reached before resolutions were even filed): Texas Instruments, Eli Lilly, CVS Health, UnitedHealth, Booking Holdings, Allstate, and Dollar General.
Two agreements were reached to report how company policies are aligned with the goals of racial justice: Foot Locker and Monster Beverage.
For a comprehensive report, look for Aperio’s 2021 Shareholder Advocacy in early 2022.
2 Not only do these resolutions have a long history, they almost always request disclosure of information rather than policy change; disclosure only generally leads to higher proxy voting support from shareholders.
This material is provided for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are subject to change at any time without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations.
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Austin Wilson
Head of Active Ownership and Associate ESG/SRI Investment Strategist
What are your key responsibilities? As an ESG/SRI Investment Strategist, I help clients identify and express their values in their portfolios. As the Head of Active Ownership, I manage Aperio’s proxy voting and shareholder advocacy services, which offer clients the opportunity to directly impact the companies in which they invest.
Describe your key previous work experience. I led the Environmental Health Program at As You Sow, the nation’s leading nonprofit practitioner of shareholder advocacy. I also led the organization’s shareholder relations efforts.
What is the most interesting aspect of the job to you? Every portfolio we build is unique, and every day is different. I am constantly learning from our clients and from my team as we uncover the capabilities and limitations of ESG data.
Describe some noteworthy projects you have worked on that directly impact Aperio’s clients. I worked with our engineering team to create technical systems that support shareholder advocacy (the sponsorship of shareholder resolutions with individual companies). This allowed us to scale and streamline this service, bringing opportunities to all interested clients and making participating easier than ever.
What do you like most about working at Aperio? I appreciate the culture of honesty, humility, and kaizen.
What are some non-work-related things we should know about you? I love the great outdoors, especially on a mountain bike, and cooking my way across the globe.
What previous role(s) did you serve at Aperio? I started at Aperio as an ESG/SRI Investment Associate.
What postsecondary degrees and/or professional certifications do you possess? Magna cum laude from the University of California, Santa Cruz, with a combined BA in Politics and Mathematics/Economics.
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Wrapped up in the rise of values-aligned investing and stakeholder capitalism is an increase in active ownership. One way to measure this rise is in the vote totals in support of shareholder resolutions on environmental and social issues...
