Anti-ESG Proposals Have Increased in Volume, but Fare Poorly

The 48th edition of the Equilar CHRO Navigator Newsletter features a recent study from Jeremy Ho , Senior Research Analyst at Equilar, that delves into the prevalence of anti-ESG shareholder proposals and their success rates. If you enjoy regular #CHRO content, please like, share and subscribe.

The movement for greater corporate responsibility over environmental, social and governance issues, commonly known as ESG, has become increasingly prevalent across boardrooms and shareholder meetings in recent years. However, alongside this momentum, there has been growing opposition to corporate ESG initiatives, and groups critical of these efforts have grown in tandem. The debate over ESG has been a hot-button topic for years—further exacerbated since the COVID-19 pandemic—and has only continued to grow in importance within shareholder meetings.

A recent example can be seen in Costco’s latest proxy filing, where the Company defended its DEI program against an anti-ESG proposal that criticized the initiative as financially irresponsible and discriminatory. This comes at a time when an increasing number of companies are rolling back similar programs. The pressure from anti-ESG shareholder proposers continues to grow, making its way into corporate boardrooms.

This Equilar study analyzes all anti-ESG shareholder proposals that have been presented at companies’ general shareholder meetings within the Equilar 500—the 500 largest U.S. public companies by revenue—over the last five years. Shareholder proposals were categorized as anti-ESG if they mention calling for a decrease in claiming corporate responsibility for issues that span environmental, social and governance topics or are critical of investor intervention that call for companies to be held liable for social or environmental issues.

The research examines shareholder proposals that were presented at companies whose annual general shareholder meetings were held between calendar years 2020 through the first half of 2024 (or January 1 to June 30, 2024). A key finding from the study is that while the anti-ESG movement is gaining steam and Equilar 500 companies have each received an increasing number of such proposals across the board since at least 2020, the support for anti-ESG shareholder submissions have consistently remained low.

Overall, there has been an increase in volume for the number of filings that anti-ESG proponents have pushed forward. During the first half of 2024, the Equilar 500 saw 92 anti-ESG filings, which pales in comparison to nine in all of 2020. These findings indicate that the anti-ESG movement is still gaining momentum and not likely to lose steam in the near future. The brief dip in 2021, likely due to the pandemic's impact on shareholder engagement, was an anomaly in what has otherwise been a steady increase in proposals across the Equilar 500. By the first half of 2024, anti-ESG proposals had reached their highest volume since at least 2020, with prominent companies like MasterCard, Wells Fargo and Alphabet each receiving multiple anti-ESG proposals during their 2024 annual general meetings (AGMs). Approximately, 29% of all Equilar 500 ESG proposals were anti-ESG in the first half of 2024, while in 2020, that number was at just 6%. The upward trends in the data indicate that ESG opposers will likely continue to increase their volume of proposals in future annual meetings.

The anti-ESG camp has disproportionately targeted some industry sectors over others, and from 2020 through the first half of 2024, these proponents have focused primarily on financial services, consumer cyclical and communication services as their top three most targeted industries. Financial services still remains at the forefront of these submissions, though this hasn’t always been the case. Companies within the consumer cyclical sector were the most common for anti-ESG to propose in 2020, and no anti-ESG proposals were present for financial services companies. This is in juxtaposition with the first half of 2024, when financial services dominated in receiving such submissions and made up around 29% of all anti-ESG proposals during the period. This shift toward financial services is partly driven by concerns about “politicized de-banking,” which, according to a 2024 proposal by Bowyer Research for Bank of America, refers to “religious and political discrimination against customers by companies in the financial services industry.”

Behind financial services, software and technology companies, including those in communication services (such as Netflix and Meta) and consumer cyclical (like Amazon), are also major targets of anti-ESG proposals. Companies focused on software and technology represented approximately 21% of all anti-ESG proposals in the first half of 2024. This targeted and dynamic approach underscores the anti-ESG movement’s attempt to influence some of the world’s largest companies.

While the volume of anti-ESG filings have accelerated in recent years, the same can not be said for how they actually fare when votes are submitted. ESG proposals consistently fail to rally majority median support, and anti-ESG submissions are routinely struggling to surpass single digits for median support—never rising above 5% since 2020. The data shows that anti-ESG proposals continue to experience low support, despite an increasing volume

The themes and areas that anti-ESG proposers have chosen to focus on have changed over the years. Examining the different proposal types and themes throughout the years have reflected the ESG opposition’s shifting priorities. For example, environmental proposals saw the highest percentage point increase (barring 2021 because of the low denominator), as they represented just around 9% of all anti-ESG proposals in 2022 then jumped to almost 22% in the first half of 2024. Additionally, the largest volume jump can be seen in governance topics with just five presented at 2020 meetings, but increasing to 45 for just the first half of 2024. Similar to the disproportionate attention to different industries discussed earlier, the ESG objectors have chosen to shift gears toward being more governance-focused while still increasing the share of environmental proposals.

Furthermore, certain types of proposals reflecting the anti-ESG zeitgeist are increasingly being disclosed in proxy statements. Submissions that deal with either diversity and inclusion, sustainability, or carbon-related issues have been featured in the top three most common proposal types for each year we have examined. The most common proposal type in the study, diversity and inclusion, appears in four of the five years examined and often advocates for “non-discrimination” and the dismantling of “viewpoint discrimination” within corporate culture. For example, the National Center for Public Policy Research has submitted similar proposals in two different years: 2020 at Starbucks and in 2024 at Apple that both regard an “EEO Policy Risk Report.” The introduction to both supporting statements testify that the company does not "explicitly prohibit discrimination based on viewpoint or ideology in its written EEO policy.” With this example and the data points discussed in mind, we can expect more homogeneity among anti-ESG proposals as they attempt to address the contentious climate of shareholder meetings.

In conclusion, the study shows that the anti-ESG proponents are increasing their voice through a higher volume of shareholder proposals in an attempt to reach wider audiences, albeit with limited support. Though the future remains uncertain, the data does suggest that the anti-ESG movement will continue on and maintain a strong presence in shareholder meetings while possibly expanding reach in the coming years.

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