Shareholder resolutions focusing on social and environmental issues made up the largest portion of all shareholder proposals in 2010, and it is estimated half of all shareholder resolutions in 2011 will center on social and environmental issues, according to a new Ernst & Young LLP report, Shareholders Press Boards on Social, Environmental Risks.
According to the report, the number of corporate social responsibility-related shareholder proposals that came to a vote rose from 150 in 2000 to 191 in 2010, and those proposals garnered average voting support of 18.4 percent of votes cast in 2010 vs. just 7.5 percent a decade earlier. The percentage of social and environmental shareholder resolutions that garnered at least 30 percent shareholder support, a critical threshold for many corporate board members, rose from just 2.6 percent in 2005 to 26.8 percent in 2010.
"Increased awareness among investors and regulators of the reputational and financial risks associated with CSR and environmental sustainability places more pressure on companies to identify and manage these issues," said Steve Starbuck, Americas Leader Climate Change and Sustainability Services, Ernst & Young LLP. "This trend has truly evolved over the last decade and it is gaining more traction as reflected in the growing number of proposals voted on and the level of 'for' votes cast this season."
Driven by concerns about the financial and reputational risks associated with climate change and sustainability, institutional investors are increasing the number of environmental and socially focused shareholder proposals and making them more specific. A growing number of these proposals are linking social and environmental matters to traditional governance issues, such as compensation and the qualifications of board members.
"As shareholder resolutions related to climate change risk and other environmental issues increase, the most progressive, forward-thinking companies will be prepared to address stakeholder concerns," said Ann Brockett, Americas Assurance Leader, Climate Change and Sustainability Services, Ernst & Young LLP.
