Environmental and social (E&S) proposals at European AGMs have seen support treble in three years, according to new research.

E&S proposals have so far this year received average shareholder support of 17.9%, up on the 6.2% in 2021. Last year, average support stood at 15.2%.

Observers believe shareholders are responding to increasing regulatory demands—among them the EU’s Corporate Sustainability Reporting Directive (CSRD)—prompting shareholders to ask for enhanced disclosures.

According to Josh Black, editor-in-chief with Diligent, one of the firms behind the research: “Evolving reporting requirements are prompting investors to ensure companies are set up for success and prepared to comply.

“At the same time, companies must also remain focused on appropriately incentivising executives and strengthening company performance.”

Stateside proposals

Meanwhile in the US, research into the proxy season so far shows that “anti-ESG” proposals are on the rise. Research by Georgeson, the shareholder advisory firm, shows anti-ESG proposals rose 19% for 2024 proxy season and now account for one in 10 of all ESG-related proposals.

However, the US is now seeing the appearance of biodiversity and AI-related proposals. Both subjects saw no proposals in 2023 but this year there were 12 proposals on biodiversity and 15 seeking more disclosures on AI.

Georgeson says ESG proposals have lost popularity. Only one has passed this year in the US so far, compared with four in 2023.

Shareholder activism

Diligent says the UK and Germany take the lead on E&S shareholder activism. UK companies faced calls to sell off business divisions to realise value while in Germany the key issue is mostly board positions.

The UK attracts activists principally because of the “relative cheapness” of UK stocks compared with counterparts in the US.

There is currently a fragmented pictured when it comes to sustainability reporting around the world. The EU has legislated hard, not only with CSRD but also the Corporate Sustainability Due Diligence Directive (CSD3), which was recently passed for introduction.

In the UK, listed companies currently have to report using TCFD climate-risk reporting guidelines, but work is currently under way to review and clear rules for use from the International Sustainability Standards Board, which has worked to distil reporting guidelines from a number of different bodies.

In the US, sustainability reporting remains highly controversial and intensely politicised. Attempts by regulators at the Securities and Exchange Commission to introduce mandatory climate-risk reporting rules have stalled, after they were challenged in a legal action yet to be resolved.

Attitudes to ESG reporting and policy making at large companies is an evolving picture, affected by public opinion and political uncertainty, particularly in an election year for the EU, US and UK.

Nevertheless, the trend is for companies to disclose more information with the support of investors. It is difficult to see how this might change.