The predictions of Dan Romito, Pickering Energy Partners include increased disclosure from public companies and their private company connections, more ESG-focused shareholder proposals, more focus on water issues along the lines of climate change issues, advancement of offsets, Scope 3 disclosures, the US leaning toward Europe’s sustainable finance disclosures, greater focus on climate metrics in credit due diligence, new SEC rules on human capital metrics and cybersecurity. A key connection between these connections is economic pressure playing more of a role than government regulation. Romito also has a shift in proxy voting mechanics at the top of his list.
Blackrock’s voting “democratization” will gain popularity & eventual adoption by State Street & Vanguard, thereby adding yet another drain on management’s investor engagement resourcesLarry Fink’s 2022 letter to CEOs outlines an unprecedented systematic change to proxy voting and marks a potentially disruptive inflection point within the conventional proxy voting process. According to Blackrock, “this option gives institutional clients in separately managed accounts (SMAs) the ability to exercise their voting decisions on the topics or at the companies that matter most to them.” In other words, Blackrock has opened the door to an entirely new roster of complex stakeholders.The Top 15 Anticipated ESG-Related Considerations That Will Influence Strategy in 2023