The Proxy Preview: ESG in 2023

At least 542 environmental, social, and governance (ESG) shareholder resolutions have been filed thus far in 2023, according to the recently released Proxy Preview 2023 report. This exceeds the total number filed in all of 2021 and appears on-pace to challenge the record 627 that were filed in 2022. The resolutions profiled in the report reveal the current priorities of left-of-center ESG activists and demonstrate the ideologically driven pressure that many American corporations are under from their own shareholders.

ESG Resolutions and the Proxy Preview

Shareholder resolutions are nonbinding proposals submitted to corporate leadership, to be voted on by other shareholders at the company’s annual meeting. Sometimes negotiations between the company and the resolution’s proponent will lead to its withdrawal. Other resolutions proceed to a full shareholder vote, in which large asset managers hold outsized voting power. Corporate management may feel sufficiently pressured to act on a resolution even if it does not receive a majority vote.

As described by As You Sow—the publisher of the Proxy Preview and one of the most prominent left-of-center ESG shareholder activist groups in the country—the idea is to leverage “the power of stock ownership in publicly-traded companies to promote [ESG] change from within.” In other words, ESG activists employ shareholder resolutions to pressure corporations into acting in accordance with the activists’ ideological positions on often-controversial sociopolitical issues.

The Proxy Preview is an annual report that catalogs these ESG shareholder resolutions. The Chicago Tribune famously called it the “Bible for socially progressive foundations, religious groups, pension funds, and tax-exempt organizations.” The report is jointly produced by two nonprofits—the 501(c)(3) As You Sow and the 501(c)(6) Sustainable Investments Institute—alongside a consulting firm called Proxy Impact. Sponsors of Proxy Preview 2023 include ESG-oriented asset managers Calvert Research & Management, Arjuna Capital, and Boston Trust Walden, as well as nonprofits such as the Nathan Cummings Foundation, the Singing Field Foundation, and the Rose Foundation for Communities and the Environment.

In addition to publishing the Proxy Preview, As You Sow itself files many of the shareholder resolutions that the report profiles. As of March, it listed 99 different proposals that it had filed with 86 different companies for the 2023 proxy season. As You Sow reported total revenues of almost $6 million in 2021 and about $12.7 million in 2020, according to its tax filings, and the group’s annual reports for those years indicate that most of this money came from foundation and sponsorship sources.

Foundations and other nonprofits that reported large grants to As You Sow in 2020 include George Soros’s Foundation to Promote Open Society ($1 million) and the related Open Society Foundations ($500,000), the Energy Foundation ($400,000), the Stephen M. Silberstein Foundation ($240,000), the Wallace Global Fund ($170,000), and the Park Foundation ($110,000). The Tides Foundation reported a $400,000 grant in 2021, while the Foundation to Promote Open Society also gave an additional $200,000 that year. The Ford Foundation committed $325,000 in 2022. Other grantmakers that have reported six-figure contributions to As You Sow in recent years include Battery Foundation, the Roddenberry Foundation, the Tara Health Foundation, ImpactAssets, and the Sustainable Markets Foundation.

Those interested in viewing the 100+ page report for themselves may do so at the Proxy Preview website, though it requires creating a free account. As in prior years, the resolutions profiled in the report give a good indication of where the current priorities of left-of-center ESG activists lie.

Notable ESG Resolutions

Just like last year, climate change was the single biggest topic, accounting for 23 percent of all shareholder resolutions profiled in Proxy Preview 2023. The largest share dealt with greenhouse gas emissions, and As You Sow filed many of these itself. Examples include a proposal filed with Lockheed Martin asking for a report on how the company intended to reduce its “full value chain” emissions in accordance with the Paris Agreement. Another set of resolutions targeted energy financing. Wells Fargo’s 2023 proxy statement included both a resolution from As You Sow asking the bank to report specifically on “how it intends to align its financing activities with its 2030 sectoral greenhouse gas emissions reduction targets,” as well as one from the Sierra Club Foundation explicitly requesting a “a time-bound phase-out” of all financing to “projects and companies engaging in new fossil fuel exploration and development.”

Of the proposals, 17 percent were classified as dealing with corporate political influence. According to the Proxy Preview, in statehouse elections companies “disproportionately support Republicans in red states,” and such states in turn “reflect the increasingly radicalized agenda of the American right wing.” These resolutions variously targeted corporate lobbying, election-related spending, and what the report calls “values congruency.” An example of this last type of resolution was filed by As You Sow with AT&T. It argued that the company had supported groups and/or lawmakers that “consistently lobbied to roll back climate regulations,” were working to “weaken women’s access to reproductive health care” and “opposed voting rights legislation,” among other things. The resolution claimed these actions were in conflict with the company’s public statements and asked for a report “analyzing the congruence of the Company’s political and electioneering expenditures during the preceding year against publicly stated company values and policies” and explaining whether AT&T would be modifying its political activities in the future.

A major trend identified in the Proxy Preview involved resolutions related to abortion, which were filed in response to the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization. Rhia Ventures coordinated 31 such proposals, according to a January press release, which fell into several different categories. For example, the Educational Foundation of America filed a proposal with Lowe’s asking for a report on “any known and potential risks or costs to the company caused by enacted or proposed state policies severely restricting reproductive rights” and an explanation of the company’s strategy “to minimize or mitigate these risks.” Other proposals—categorized as political “values congruency” resolutions in the report—were designed to pressure companies such as UnitedHealth Group and Disney into “reconsider[ing] their contributions to politicians harming their employees through enacting abortion bans,” according to Educational Foundation of America executive director David Stocks.

Proposals related to race and diversity, which increased significantly in the aftermath of the 2020 Black Lives Matter protests, continued to be filed in 2023. As You Sow submitted more than 25 resolutions with various companies asking them to report “on the effectiveness of the Company’s diversity, equity, and inclusion efforts.” The Proxy Preview noted that two dozen proposals seeking “civil rights or racial justice audits” were currently pending with companies. Coca-Cola shareholders, for instance, will vote on a proposal from the Service Employees International Union (SEIU) pension fund asking the company to commission an external audit to assess its impact on “nonwhite stakeholders.” A similar proposal filed by Trillium Asset Management was slated for a vote at Silicon Valley Bank prior to its collapse in March.

“Anti-ESG” or Conservative?

Recent years have seen substantial and increasing public pushback against ESG, a development that the Proxy Preview blames on “a small band of well-funded zealots” who are “trying to inject politics and a ‘culture war’ into basic business.” That is an ironic accusation, as it is rather difficult to read many of the shareholder resolutions profiled in the report in any way other than as an attempt to politicize corporate America, albeit from a left-progressive perspective. Indeed, they appear explicitly designed to do just that.

In that vein, 8 percent of the proposals were categorized in the report as “Anti-ESG.” In past years, the Proxy Preview simply labeled right-of-center resolutions as “conservative,” but the category name was changed to “Anti-ESG” in 2023. This appears to acknowledge that in practice the term “ESG” is synonymous with left-of-center activism.

Consider the resolutions filed by conservative groups at companies such as Apple, McDonald’s, Walmart, and Disney, asking for reports on how dependent their operations were on the communist Chinese government. Or those that asked Disney, Kroger, and Merck to publicly disclose their charitable contributions. Such resolutions would seem to fit squarely within any technical and ideologically neutral definition of “ESG,” so the fact that they are labeled “Anti-ESG” in the Proxy Preview bolsters what many conservatives have argued all along: For practical purposes “ESG” is not ideologically neutral, but rather a branch of left-of-center sociopolitical activism undertaken within the corporate sector.