Shareholders Push for Change

Resolutions filed with companies this year cover a range of environmental, social and governance issues.

- Ellen Kennedy

PROXY SEASON, A ROUGHLY three-month stretch when most public companies hold their annual meetings, is when shareholders get to weigh in on issues that matter to them. When they are dissatisfied with how their company operates, they can file a proposal, or shareholder resolution, to pressure the company to change. These days, the proposals often address environmental, social and governance issues. Some may be included on the ballot that shareholders vote on at a company’s annual meeting or by proxy.

Pension funds, religious organizations, unions and sustainable investing firms file the bulk of shareholder proposals. When a majority of shareholders vote in favor of a proposal, the resolution is said to have won. Even winning proposals, however, are nonbinding. Still, according to a recent BlackRock study, they send such a powerful message to management that companies fully adopt a whopping 94% of them. And smart investors pay attention to shareholder proposals, which may flag companies that have riled up stakeholders or are ignoring risks like climate change.

By all accounts, 2022 will be another landmark year for shareholder proposals, with shareholders building on last year’s successful campaigns to set climate change targets, address deforestation, tie CEO pay to ESG outcomes, boost corporate diversity and promote pay equity.