Press release

Environmental sustainability shareholder proposal withdrawal rates top 40%, indicating corporate disposition towards dialogue and action

New York, 12 September 2013

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Ernst & Young LLP releases 2013 review of environmental and social shareholder proposals

Investors and companies are signaling a rising interest in environmental sustainability. While shareholder proposal submissions overall grew in 2013, environmental and social (E&S) continued to represent the largest category of shareholder proposals submitted, and had the highest percentage of proposals withdrawn in connection with engagement at 30% compared to less than one-quarter for all shareholder proposals. Ernst & Young LLP’s new report – Taking flight: Environmental sustainability proposals gain more attention – identifies the specific requests investors are making in the environmental sustainability proposals, company practices referenced by shareholder proponents in their supporting statements and examples of company actions that have led to withdrawals.

In 2013, E&S topics comprised just under 40% of all shareholder proposals filed. The top five E&S proposal topic areas were:

  1. Political spending / lobbying – 36%
  2. Environmental sustainability – 35%
  3. Corporate diversity / EEO – 8%
  4. Labor / human rights – 7%
  5. Animal testing / animal welfare – 4%

Three groups of environmental sustainability proposal topics (sub-category #2 above) were prominent:

A. Climate change / sustainability: these proposals accounted for nearly half of the environmental proposals submitted;

B. Energy efficiency / recycling: these proposals accounted for 14% of proposals submitted;

C. Energy extraction-related risks: these proposals accounted for 12% of proposals submitted.

A further breakdown shows that within climate change / sustainability specific proposals, investors most commonly requested cuts in GHG emissions, greater supply chain transparency and enhanced sustainability disclosure. It is these proposals that drive the relatively high rate of withdrawals connected to dialogue or action.

“Companies are using engagement to respond to investor concerns,” said Allie Rutherford, Director of the Corporate Governance Center at Ernst & Young LLP. “Constructive dialogue on environmental and social topics often leads to increased disclosure, accountability and ultimately withdrawal agreements.”

In addition to encouraging dialogue and action, environmental sustainability shareholder proposals are being used for another purpose. In the supporting statement of a shareholder proposal, it is common for the proponent to reference what other companies are doing to create a point of comparison. This practice not only shares information but it also creates a baseline point for companies to use for their own E&S programs.

“Shareholder proposals are highlighting sustainability best practices to show results are achievable,” said Steve Starbuck, Leader Climate Change and Sustainability Services, Ernst & Young LLP. “For example, leading companies are incorporating environmental risk into their planning and reporting. Companies that identify and manage these types of risks are appropriately planning for their future.”

For more information and to access to this and other reports, visit http://www.ey.com/US/en/Issues/Governance-and-reporting.

About Ernst & Young’s Climate Change and Sustainability Services

Climate change and sustainability continue to rise on the agendas of governments and organizations around the world with rapidly evolving drivers and expectations. Your business faces regulatory requirements and the need to meet stakeholder expectations as well as respond to the opportunities presented for revenue generation and cost reduction. This means a fundamental and complex transformation for many organizations and the embedding of climate change and sustainability into core business activities to achieve short term objectives and create long-term shareholder value. The industry and countries in which you operate as well as your extended business relationships introduce additional complexity, challenges, responsibilities and opportunities. Our global, multidisciplinary team combines our core experience in assurance, tax, transactions and advisory with climate change and sustainability skills and deep industry knowledge. You’ll receive a tailored service supported by global methodologies to address issues relating to your specific needs. Wherever you are in the world, Ernst & Young can provide the right professionals to support you in achieving your potential. It’s how we make a difference.

About Ernst & Young’s Corporate Governance Center

Ernst & Young LLP’s Corporate Governance Center (EYCGC or the Center) offers balanced insights and data-rich content and analysis that foster alignment and bridges gaps among management, boards of directors and investors – raising awareness, creating understanding and serving as a conduit of information. The Center’s insights and content are supported through its proprietary corporate governance database, relationships with outside governance organizations and ongoing conversations with members of the investor and governance community.

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This news release has been issued by Ernst & Young LLP, an EY member firm serving clients in the US.

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