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18 Oct. 2017 | Comments (0)

Climate risk reporting, board diversity, and sustainability reporting are three issues worth keeping an eye on if the 2017 proxy season is any indication of shareholder sentiment. That’s the premise of a recent Chief Executive article by Thomas Singer, the principal researcher for sustainability at The Conference Board.

The article is based on Singer’s research for a new Director Notes report entitled “Environmental and Social Proposals in the 2017 Proxy Season.” (registration required to download)

The volume of environmental and social (E&S) proposals at Russell 3000 companies has consistently gone up in the past five years. Although such proposals received average support of only 21.4 percent of votes cast in 2017, support levels for these proposals continue on an upward trend. The number of E&S proposals winning majority support is also on the rise, resulting in six E&S proposals passing so far in 2017. The uptick in successful E&S proposals can largely be attributed to a shift in the voting policies of traditionally passive investors, who are beginning to exert pressure on companies by supporting proposals that call for greater disclosure of issues they deem material to shareholder value, such as board diversity and climate change risks.

The report reviews E&S proposals voted on by shareholders of Russell 3000 companies during the first half of the 2017 proxy season. The report provides details on some of the most prominent topics, including topics which received high levels of shareholder support and topics that have seen notable changes in support levels compared to last year. It also provides examples of proposal text and sponsor supporting statements, as well as board responses and related corporate disclosure.

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