Director of Stewardship Research and Policy at Morningstar Sustainalytics | Writer, Speaker, and ESG Influencer
"We still observed many poor-quality proposals come to a vote, particularly on proposals that attempted to address climate and natural capital or company impacts on people-related issues." So says BlackRock's 2024 Voting Spotlight, published on Wednesday. This observation does not come as a huge surprise, with the firm having expressed similar views last year and in 2022. (We also previewed this in the two Stewardship Snapshots newsletters published earlier this month. https://lnkd.in/eYUNVZ-e) Of course, there are as many definitions of a "quality" environmental or social proposal as there are investors who vote on them. But the graphic below illustrates a market-wide perception that, over the last three proxy years, the average quality of environmental and social proposals in the US has fallen as their volume has risen. Toward the bottom of the graphic, we see the number of proposals in Gold, Silver, and Bronze tiers – those with strong to moderate support from independent shareholders – has contracted. https://lnkd.in/edyiwKuJ That's partly down to the voting trends of some of the largest asset managers, including BlackRock, but also Vanguard, Capital Group and others as we saw in our research in January. https://lnkd.in/eNJWXHtP Meanwhile, the top part of the graphic is growing wider: narrowly targeted proposals have grown in number but without gaining significant traction with voting shareholders. Levels of support for the poorly supported resolutions toward the top of the graphic are less affected by changes in large asset managers' voting patterns – they have no history of supporting resolutions of the kind usually found at this end of the spectrum. And increasingly, we see this low-support region dominated by resolutions from anti-ESG filers (shown in red). https://lnkd.in/eDXNbi48 Looking at the data, it's clear to see why questions over resolution quality persist. But does having almost 100 proposals with less than 5% shareholder support benefit the market? Or almost 150 with less than 10% support There might not be a right answer to those questions, but it's worth asking them. #StewardshipSnapshots
