Shearman & Sterling LLP A Review of the 2023 Proxy Season: An E&S Backlash? | 18
favor of shareholder proposals that call for reasonable
enhancements to financially material DEI risk
disclosures. However, the funds may not support such
proposals where companies are already providing
sufficient disclosures, or where a request is determined
to be overly prescriptive."
4
Similarly, in 2022, Blackrock
warned that climate-related proposals were becoming
increasingly prescriptive and that it was "not likely
to support [such proposals] that, in [its] assessment,
implicitly are intended to micromanage companies.
This includes those that are unduly prescriptive and
constraining on the decision-making of the board
or management, call for changes to a company's
strategy or business model, or address matters that
are not material to how a company delivers long-term
shareholder value."
5
Proxy advisory firms ISS and Glass Lewis have echoed
those sentiments, with Glass Lewis noting in 2021
and again in 2023 that it "believe[s] directors should
monitor management's performance in mitigating
environmental and social risks…[and that] shareholders
should use their influence to push for governance
structures that protect shareholders and promote
director accountability [in this regard]…However, we
are not inclined to support proposals…seeking the
implementation of prescriptive policies."
6
ISS's policy
on E&S also is and has been generally supportive,
particularly in respect of proposals "seeking greater
transparency and/or adherence to internationally
recognized standards and principles," but at the same
time it has cautioned against proposals that are overly
prescriptive in nature.
7
Years of record success for E&S proposals has likely
emboldened their proponents, leading to a growth
in the number of E&S proposal submissions and an
expansion in the scope of their demands. Instead of
carefully crafting and campaigning for resolutions that
are targeted and tailored to a particular company, in
2023, certain proponents were more likely to mass
produce generic proposals, or submit more aggressive
and prescriptive proposals, in either case, failing to
meet the parameters guiding shareholder voting of
many institutional investors and also giving companies
the ability to challenge the merits of the proposals in
engagement meetings with institutional investors.
In spite of declining support for E&S proposals, the
number of E&S shareholder proposal submissions has
continued to enjoy record-breaking year-over-year
growth, with the number of submissions increasing
approximately 44% over the last five years.
4
See Vanguard, "Vanguard Investment Stewardship Insights –
Shareholder Proposals: Diversity, Equity and Inclusion," https://
corporate.vanguard.com/content/dam/corp/advocate/investment-
stewardship/pdf/perspectives-and-commentary/INVDEIS_052021.pdf
(May 2021).
5
See BlackRock, "2022 Climate-Related Shareholder Proposals
More Prescriptive than 2021," https://www.blackrock.com/corporate/
literature/publication/commentary-bis-approach-shareholder-
proposals.pdf (May 2022).
6
See Glass Lewis, "2023 Policy Guidelines,"https://www.glasslewis.
com/wp-content/uploads/2022/11/ESG-Initiatives-Voting-Guidelines-
2023-GL.pdf (November 30, 2022); see also Glass Lewis, "2021
Guidelines – an Overview of the Glass Lewis Approach to Proxy
Advice," https://www.glasslewis.com/wp-content/uploads/2020/11/
ESG-Initiatives-Voting-Guidelines-GL.pdf?hsCtaTracking=c5fe11ce-
e51d-449a-91fec00b8e16d0%7C80513084-8049-48f0-85bb-
0e6864e24a9f (November 24, 2020).
7
See ISS, "Sustainability Proxy Voting Guidelines," https://www.
issgovernance.com/file/policy/active/specialty/Sustainability-
International-Voting-Guidelines.pdf (January 17, 2023).
Passage
rate %
Passage
Approved
Voted
Submitted
339
162
167
186
280
311
7
19
38
32
7
4.3%
11.3%
20.4%
11.4%
2.2%
339
399
471
513
2019
339
162
7
2020
339
167
19
2021
399
186
38
2022
471
280
32
2023
513
311
7
4.3%
2.2%
11.3% 11.4%
20.4%
No. of E&S
proposals
submitted
No. of E&S
proposals
voted
No. of E&S
proposals
approved
E&S Proposals Submitted, Approved
Source: The Conference Board, Shareholder Voting Trends (2018-
2022) (September 27, 2022), at 14-23, https://www.conference-board.
org/topics/shareholder-voting/trends-2022-brief-1-environmental-
climate-proposals, and Proxy Season Review: Navigating ESG
Backlash & Shareholder Proposal Fatigue (October 18, 2023),
at 4, 9-10, https://www.conference-board.org/publications/2023-
proxy-season-review-navigating-ESG-backlash-and-shareholder-
proposal-fatigue.
* The data shown above covers companies constituent of the Russell
3000 index for the full year, except for 2023, in which the period
considered was from January 1 through June 30.
