In the wake of the COVID-19 pandemic and racial justice movement, the largest shareholders are increasingly voting in favor of ESG proposals. A recent
article from Morningstar takes a deep dive into the topic:
- Through May 7, 21 ESG proposals received majority support. This is 6 more than the same date in 2020.
- Average support for ESG proposals is up 12% in 2021, to 44%. Unaffiliated shareholders have increased their average support for workplace D&I and social justice proposals to 46%, up from 39% in 2020.
- There were a record 37 diversity-related proposals as of May 21. On average, the proposals have received 43% support.
- In their own 2020 survey of 100 companies, Bloomberg found that the number of companies disclosing the EEO-1 report rose from 25 in June to 68 in October. Two proposals to disclose the data have received majority support so far in 2021 – at Union Pacific and DuPont.
- An emerging proposal involves shareholders asking companies to conduct and report on a racial audit to see if their business model causes or perpetuates racial discrimination. The proposals received more than 30% support at both J&J and JP Morgan.
Momentum has clearly swung toward enhanced disclosures for workforce diversity data.
State Street and
JP Morgan have specifically requested it while
Vanguard and BlackRock strongly encourage it. The Bloomberg article makes a good case for focusing on what comes next. Companies will need to help shareholders and stakeholders process the new surge of data in order to facilitate accurate (and not misleading) comparisons across companies, industries, and geographies.
