Environmental and social topics lead shareholder proposal submissions in 2012 proxy season

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New York, 3 October 2012 – Today, Ernst & Young LLP released a new report showing environmental and social proposals continued to lead all other categories in the 2012 proxy season, representing more than 40% of all shareholder proposals submitted. The report – Engaging on environmental and social topics – finds that while half of the proposals submitted on environmental and social topics came to a vote, more than one-third were withdrawn and more than 70% of those withdrawn were done so as a result of constructive dialogue and company action. These withdrawals were most common for proposals submitted by socially responsible investment funds and public pension funds, which submitted more than half of the environmental and social proposals this year.

"Investors focused on environmental and social issues have long used shareholder resolutions as a way of engaging companies on these topics," said Steve Starbuck, Leader Climate Change and Sustainability Services, Ernst & Young LLP. "Increasingly, we're seeing companies use engagement to learn more about and respond to investor concerns in this area – and these discussions may result in better disclosure or changes to corporate policies and practices."

Several key topics that continued to emerge during this proxy season include:

  • Managing the global supply chain — embedded in the ask of a significant number of shareholder proposals this year was an interest in supply chain related impacts.
  • Linking executive compensation to sustainability metrics — investor focus on this topic has largely been through behind the scenes engagement (only a handful of shareholder proposals were submitted and those that came to a vote received relatively low support). However, some companies are already taking the lead in this area by linking pay to metrics relating to energy efficiency, water usage and the reduction of carbon emissions.
  • Including environmental/social considerations in determining director qualifications—although only a few of these shareholder proposals were voted, they were carefully targeted and as a result tended to receive support of between 20% and 30%.

For a breakdown of the top environmental and social proposals in the 2012 proxy season, please see below.

Breakdown of top environmental/social proposals

Proposal topics

Proposals submitted (#)

Average support for proposals voted (%)

Proposals withdrawn due to dialogue / action (%)

Disclose/provide oversight over political spending/lobbying

126

22%

18%

Disclose/manage sustainability (general and GHG emissions); includes requests for issuance of formal sustainability reports

55

28

44

Disclose/enhance diversity / Equal Employment Opportunity (EEO) policy

30

28

23

Disclose/manage risks of energy extraction techniques

21

21

38

Disclose/manage operational workplace safety

11

20

64

The report is based on a review by Ernst & Young LLP of more than 900 shareholder proposals submitted at Russell 3000 companies for annual meetings through 30 June. Vote results are calculated based on votes cast for and against the proposal. Previous year data is full year.

For more information, to access Engaging on environmental and social topics and to see related reports, visit http://www.ey.com/governance.

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This press release is issued by Ernst & Young LLP, a member firm providing services to clients in the US.

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