At least 386 shareholder proposals were filed by mid-February on environmental, social and governance issues, according to As You Sow's annual "Proxy Preview" roadmap to ESG proposals (303 proposals were still pending as of February 15, 2019). The hundred-page report, which provides a comprehensive look at 2019 proposals as well as a review of 2018 results, found that political activity (25%) and environment (21%) proposals constituted almost half of total proposals so far, while board diversity/oversight (12%), sustainability (11%), human rights (11%) and decent work (10%, mostly pay equity and working conditions) made up another 44%.
Board Diversity. Of the 44 resolutions submitted so far on boards (a third more than last year), 28 focus on board diversity. However, they focus on reporting regarding board diversity efforts rather than an outright quota or mandate as with recent California state legislation requiring a certain proportion of women on boards. Three proposals ask about requiring certain types of expertise on the board slate, including a new AFL-CIO proposal asking Amazon to "add human capital management" to director nominating criteria given increased investor focus on this subject.
Decent Work. Arjuna Capital is back in the forefront with 11 proposals on gender/ethnic pay disparity, while the New York City pension funds have submitted 10 proposals on the gender pay gap; other proposals have been submitted by Proxy Impact, Zevin Asset Management and Pax World Funds (of all the proposals, only three have been withdrawn so far and two companies have challenged based on the resolution attempting to "micromanage" the company (i.e., encroaching on "ordinary business operations.").
Linking ESG to Pay.So far, 20 resolutions have been filed seeking links between sustainability and pay, including 10 on drug pricing or opioids and three on senior executive diversity.
This year's Proxy Preview includes a letter from SEC Commissioner Robert Jackson warning against dismissing issues important to investors as simply "immaterial" or "social policy" and noting that "it is not the SEC's role to impose from Washington the views of Commissioners" by allowing inappropriate exclusion of investor proposals from proxy votes. As we have recently reported, the SEC continues to refine its interpretation of when companies can exclude issues under certain exemptions to shareholder proposal rules. In addition, as a follow-up to the November 2018 Roundtable on proxy process issues, SEC Chair Jay Clayton appointed Commissioner Elad Roisman to lead the review, focusing on issues such as updating the shareholder proposal resubmission thresholds and proxy advisory firms.