2023 Proxy Season Update: Shareholder Activism on “E” Topics

2023 Proxy Season Update: Shareholder Activism on “E” Topics

Blog ESG Epicenter

What a difference a year makes.

A highlight of the 2022 proxy season was the increased shareholder focus on a number of ESG topics, including more than 100 “E”-related shareholder proposals related to climate change, deforestation, emissions, plastics reduction, climate-related lobbying, and environmental justice. In 2022, 23 of these proposals passed, notably in categories related to environmental justice, climate change, deforestation, and plastics reduction.

The 2023 proxy season has seen a shift in “E”-related shareholder proposal trends. The number of proposals submitted on environmental topics as a whole increased in 2023 compared with 2022, but fewer proposals were voted on.1  In 2023, less than half of proposals in the “E” categories went to vote, compared with 60% in 2022. Perhaps more notable, the average support for environmental shareholder proposals that have gone to a vote in 2023 is more than 10% lower than in 2022.2

During the 2023 proxy season, shareholders rejected all but four proposals related to environmental topics. The passing proposals included two plastics reduction proposals, one proposal calling for a report on alignment between company lobbying activities and the Paris climate agreement, and one proposal calling for a report on company methane emission disclosures. Nonetheless, we continue to see several trends related to environmental proposals to which companies should pay attention.

  • Climate-Related Lobbying: In 2022, 20 companies received proposals calling for an examination of their climate-related lobbying practices, and how those practices aligned with the companies’ public statements. In 2023, even though an equal number of proposals were received, there was an increase in the proportion of proposals that went to a vote (three in 2022 compared with 11 in 2023) and a higher percentage of votes cast in favor of each proposal (an average of 30.6% voted in favor in 2022 compared with nearly 35% in 2023). Additionally, the environment-related proposal that passed this year with the highest percentage was a climate-related lobbying proposal. The upward trend in votes cast in favor of these proposals suggests that shareholders have a sustained interest in this topic.
  • Deforestation: Between 2022 and 2023, the number of submitted proposals calling for companies to assess how they can eliminate deforestation from their supply chains increased from four to nine. Of this year’s nine proposals, eight were withdrawn by the shareholder proponents through agreement with the target companies. The increase in the number of proposals signals a likelihood of continuing demands to assess deforestation-related risk in supply chains, including with respect to companies that do not produce wood and paper products.
  • Environmental Justice: As discussed in a previous WilmerHale alert, the 2022 proxy season saw a dramatic increase in the number of proposals calling for civil rights or racial equity (including environmental justice) audits, with nearly 40 companies receiving such requests. Eight of those proposals were received by companies that operate in the environment, energy, and natural resources space, which implicated environmental justice concerns. This season, by comparison, only six companies received proposals explicitly calling for environmental justice reports, racial equity audits that analyze community impacts, or audits that incorporate input from experts on environmental racism. In the 2023 season, none passed. A number of companies negotiated the withdrawal of these proposals, and where the proposals were not withdrawn, companies included detailed opposition statements in their proxy statements indicating the steps they are already taking. By contrast, the number of newly issued environmental justice-focused regulations and policies by federal and state regulators has notably increased. 
  • Plastics Reduction: In 2022, 16 companies received proposals calling for them to reduce their plastics use. Of these proposals, seven went to a vote and two passed. In 2023, although fewer proposals (14) were received by companies, more went to a vote (10) and two passed. The environmental impact of plastics use continues to be a priority for domestic and international regulators, and is likely to continue to be a focus for shareholders as well.

Despite downward voting trends this year, the regulatory landscape surrounding environmental issues continues to evolve at the federal and agency levels. For example, the Biden Administration proposed climate disclosure rules for federal contractors, and the Securities and Exchange Commission is expected to adopt final rules for climate-related disclosures sometime this year.

Given these regulatory trends, and notwithstanding voting results on environment-related proposals in 2023, companies should consider their options for proactive engagement on environmental issues. Companies may contemplate conducting voluntary assessments—even when they have not yet received a shareholder proposal or when a proposal has failed—to preempt future proposals, to help defend against any future proposals that may be made, and to retain the flexibility to control the scope and timing of a review. Addressing ESG- and sustainability-related risks as part of an overall consideration of the interests of all relevant stakeholders can be consistent with directors’ fiduciary duties.

The WilmerHale team counsels clients across industries on ESG issues, including conducting racial equity and environmental audits, in the consumer retail, food and beverage, and financial sectors. Our team monitors trends in this area and regularly advises companies on navigating developments. Please contact the WilmerHale ESG team to learn more.

See Abigail Gampher, Analysis: Proxy Season Saw More ESG Proposals but Little Success, BLOOMBERG LAW (July 12, 2023), https://news.bloomberglaw.com/environment-and-energy/analysis-proxy-season-saw-more-esg-proposals-but-little-success

See Paul Washington and Merel Spierings, 2023 Proxy Season: More Proposals, Lower Support, HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE (June 1, 2023), https://corpgov.law.harvard.edu/2023/06/01/2023-proxy-season-more-proposals-lower-support/


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