The Rise of Anti-ESG Shareholder Proposals | Morningstar

Ruth Saldana reports on a concerning number of “anti-ESG” shareholder proposals filed by politically conservative groups, chief among them the National Center for Public Policy Research (funded by ultra-right groups including the Marcus, Scaife, and Coors foundations and a promoter of climate change denial and disinformation about January 6 ) and the National Legal and Policy Center (Scaife-funded and corporate lobbiests). At least 27 such proposals had been filed by the middle of March, evenly split between diversity (nine), corporate political influence and charitable giving (nine), and human rights (eight). Compare these two proposals.

We’ve seen an increase in what we’ve been calling ‘anti-ESG’ proposals. These are disingenuously submitted proposals, usually by groups that oppose the work of ‘pro-ESG’ investors.Through conversations with multiple industry players, many on background, we get the sense that the intent behind some of these proposals is less to offer a constructive path to change and more to disrupt a movement that is gaining steam. The aim appears to be to hinder the work that pro-ESG groups are doing, by using the machinery of proxies against it and thereby negating the efficacy of legitimate pro-ESG proposals.

Morningstar’s Jackie Cook points out that while these resolutions comprise only a small proportion of ESG issues that come to vote, they potentially contribute noise to analyses of ESG voting, and for this reason, Morningstar’s proxy database tags the resolution filer and flags ‘anti-ESG’ resolutions. Cook is director of stewardship in the Sustainalytics’ Stewardship Services Team, managing the ESG Voting Policy Overlay service.

We also found that companies, and investors, are fighting back. In some cases, pro-ESG groups are changing their strategies and approaches to counter the tactics being used by anti-ESG players. In others, when anti-ESG proposals come up for vote at company meetings, investors are rejecting them, with many earning 3% or less support. This, too, comes with some danger, though, because if any proposal does not get a minimum of 5% support from investors, under the new regulatory rules in the U.S., that proposal cannot be filed again for three years, regardless of intent.

The Rise of Anti-ESG Shareholder Proposals | Morningstar

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