A major investment research company has warned that US corporates may be losing “useful signals” on sustainability issues after the number of environmental and social (E&S) shareholder resolutions fell significantly this year.

Research from Morningstar also shows a yawning gap between US investors and their European counterparts, when comparing support for E&S.

Lindsey Stewart, Morningstar’s director of investment stewardship, writing for the Harvard Law School governance blog, says that, in the past, the proxy season has provided US markets with clear signals about which sustainability topics are considered most important by fund managers. But that is no longer the case.

“Unfortunately,” Stewart writes, “our research shows that those signals are becoming less clear, raising concerns over the market’s ability to transmit information on ESG topics that many institutional investors may consider useful for making sound long-term investment decisions.”

The research found that the number of E&S proposals this proxy season peaked at 30, as compared with 100 every year for the previous five years.

A gap has also opened between support for classic governance resolutions (on average 35% in 2025) and support for E&S proposals (only 16%).

The average support among six leading US fund managers for E&S resolutions is 18%, while in Europe the average is 91%.

The Trump effect

Morningstar’s findings come in a year in which the Trump presidency has rejected the importance of social and environmental issues in governance, in particular the status of diversity and inclusion programmes.

Fund managers have also faced considerable pressure from Republican politicians to end their use of ESG factors in engagements and as a guide for voting during proxy season.

Democrat states have recently pushed back, writing to BlackRock, the world’s largest fund manager, that the meaning of “fiduciary duty” includes consideration of long-term issues “whether climate-related, governance-related or supply chain-related”.

However, amid the gloom, some in the US remain optimistic that markets as a whole remain set on pursuing a sustainability agenda.

Writing for the Financial Times, MIT research scientist Florian Berg points out that there “are reasons to be hopeful about the resilience of efforts to tackle environmental issues at the corporate level”.

The number of companies worldwide reporting on climate change has grown, according to figures from the Carbon Disclosure Project; ESG data providers appear to be doing more business with asset managers; and a number of jurisdictions around the world (37 at a recent count) are in the process of adopting new reporting rules from the International Sustainability Standards Board.

Berg concludes that despite opposition, the current trends in reporting and analysing corporate performance on sustainability criteria will “not be easily reversed”.

“Efforts to tackle climate change at the corporate and investor level will continue,” he says.