A bumper year for ESG shareholder activism

2022 is lining up to be a bumper year for ESG shareholder activism.

So far, a record of over 200 environmentally and socially focused resolutions have been submitted to corporations in the US, continuing the growing trend of investor pressure on boardrooms.

Proposals are varied, with Amazon facing a resolution requesting an audit on workplace health and safety and fast-food chain McDonald’s a resolution on ending the confinement of gestating pigs.

On the environmental front, Exxon is set to consider a proposal to cut emissions and sales of oil and gas in line with the Paris Agreement. At the same time, McDonald’s is also being asked for further reporting on its reduction of plastics. 

Billionaire Carl Icahn, who became famous in the 1980s for corporate takeovers, has criticised McDonald’s this week over its suppliers’ treatment of pigs, proposing two ESG-focused candidates for the company’s board.

Icahn criticised Wall Street for capitalising on ESG for profit without doing enough to support “tangible societal progress”.

Icahn has faced firm resistance from McDonald’s, who called his requests “unfeasible”. However, his vocal support of sustainability and outspoken criticism of executive pay packages as excessive can be interpreted as a sign of the continued rise of the importance of ESG and the increasing popularity of encouraging ESG reform through shareholder activism.

Some commentators suggest that the greenest stocks are becoming too expensive, sustainable fund managers are looking to invest in companies that are still working on their ESG strategies, and disclosures report the WSJ. 

In efforts from sustainable portfolios to increase returns, some investors have turned to a strategy of purchasing companies which have made limited but promising ESG progress or which have shown the intention to introduce changes. 

The logic for selecting these stocks is an expectation that they will earn their ESG trading premium over time. Many ‘improver’ companies are also categorised as value stocks. 

Amundi has launched seven funds focused on so-called ‘ESG Improvers’. 

One number – 68%. The percentage of individuals who would be more willing to take a job at a company they consider environmentally sustainable, according to an IMB survey of 16,000 across ten countries. Only 21% said they thought their current employer to be sustainable.

This report was created by Sillion, a consultancy firm with two areas of focus: sustainability strategy and sustainability communication.