Below is an excerpt from ISS ESG’s thought leadership paper “The Hidden Significance of Shareholder Proposals.” The full paper is available for download from the Institutional Shareholder Services (ISS) online library.
Shareholder proposals rarely receive majority shareholder support, but the engagement
that results from submitting these proposals can impact the company’s management of
sustainability risks. Management teams routinely recommend against such proposals yet
are keenly aware that even failed votes represent some portion of the shareholder base
that is dissatisfied with current policies. Since 2014, only 30 of the environmental and social
proposals considered in this paper received a passing vote, comprising 3.26% of
all such proposals. However, corporate responses to shareholder resolutions can result in
improved sustainability outcomes for companies long after the votes are tallied.