Investors believe that companies are only fully implementing 23 per cent of their ESG-related resolutions and that 14 per cent of proposals will only be partially implemented, according to UN-based Principles for Responsible Investment (PRI).
According to the survey, just half of the companies reported that they have fully or partially implemented or will fully or partially execute the ideas that their shareholders approved. Around 6 per cent would be dealt with before or during the upcoming proxy voting season.
PRI found that neither the company nor the proponent indicated that the corporation has implemented, or would be implemented, 20 suggestions, more than one-quarter of those examined, despite the fact that there was no publicly available evidence to the contrary at the time of publishing.
According to the PRI, if businesses fail to implement these resolutions, it limits investors’ capacity to carry out a programme of stewardship successfully.
The 2022 proxy season had one of the highest records for majority-supported environmental, social, and governance (ESG) shareholder proposals in recent years, according to PricewaterhouseCoopers (PwC).
But, less than half of those shareholder proposals, according to their proponents, are being taken into account by companies as the 2023 proxy season gets underway.
Majority-supported shareholder proposals made up less than 10 per cent of the more than 900 ESG proposals submitted last year, but as they start to rise, corporate response to shareholders is coming under scrutiny says PRI.
PRI senior specialist Carly Jacobs says: “Companies failing to put in place resolutions with majority support from shareholders compromises investors’ ability to enact a fully realised program of stewardship, and therefore stymies investors in their responsible investment efforts.
“We hope this research spurs companies failing to act on resolutions to urgently rectify the situation. For investors, it should ring alarm bells and motivate them to move swiftly during the 2023 proxy season, to send a clear message that company unresponsiveness to passing shareholder resolutions is not acceptable.”
