Institutional Shareholder Services (ISS) recently released its “U.S. Shareholder Proposals: A Decade in Motion,” in which it examines trends in shareholder proposals submitted at U.S. companies from July 2014 to June 2024, as well as corporate behavior and disclosure. The findings of the report are summarized below.

Greater Focus on Environmental and Social Risks Compared to Governance and Compensation Risks

While governance and compensation proposals represented the largest portion of shareholder proposals up until the mid-2010s, the volume of these proposals has decreased over the past 10 years, the report found. ISS attributes this decline to many governance-related issues being either resolved or becoming less prominent. 

Conversely, environmental and social (E&S) proposals have surged in the past 10 years. They accounted for 62% of the total shareholder proposals in the 2024 proxy season, up from 44% a decade earlier. Notably, E&S proposals increased by 57% from 2020 to 2022 and continued to rise to a record 610 in the 2024 proxy season. The increase in the past two years, however, was primarily due to an increase in “anti-E&S” proposals.

For the past five proxy seasons, the most popular E&S proposals have been focused on climate change and human capital management (including diversity, inclusion, discrimination in the workplace, employee benefits, and gender and racial pay equity). ISS also notes the prominence of proposals focused on lobbying and political activities and human rights and supply chain concerns.

Fewer E&S Shareholder Proposal Withdrawn, More Going to a Vote

The percentage of withdrawn E&S proposals increased during the 2010s and reached a record 49% of all submitted E&S proposals in 2021, according to the report. Since 2021, however, the percentage of withdrawn E&S proposals has steadily declined. ISS attributes this decline to companies and proponents finding less common ground on which to negotiate, which may be a result of companies making significant efforts on their own to improve their sustainability disclosures and management programs over the past five years and proponents pushing the envelope for more robust disclosure or action plans.

The report also notes a sharp drop in the rate of omissions for E&S proposals in 2022 (5%) from 15% in 2021, with a slight increase for the 2024 proxy season (8% compared to 4% in 2023).  ISS attributes the 2022 bump to the U.S. Securities and Exchange Commission’s updated guidance in November 2021, which made the exclusion of certain shareholder proposals more challenging. According to the report, anti-E&S proposals have historically demonstrated much higher rates of omissions and lower rates of withdrawal.

On the other hand, a much higher percentage of governance and compensation proposals went to final vote over the past decade (nearly 70% of governance and compensation proposals compared to 51% of E&S proposals), which may suggest that parties are less willing to negotiate and companies are having more success blocking these proposals.

Support Levels for E&S Shareholder Proposals

Support for environmental shareholder proposals has gradually increased since 2015, the report found, noting an “explosion” in support during the 2021 proxy season (primarily those proposals focused on climate change) with 46% of voted proposals passed and a median support level of 49% of votes cast. Since 2021, however, median support has dropped to 19% of votes cast in 2023 and 21% in 2024.

The median support level for social shareholder proposals has also gradually increased since 2015, peaking in 2021 at 33% of votes cast. Since 2021, however, median support has dropped to 19% of votes cast in 2023 and 18% in 2024.

The number of governance and compensation proposals voted upon as well as their support has been relatively stable the last 10 years, though both have trended downward, according to the report. ISS attributes this decrease to a likely improvement in the governance structure of many companies since 2015.

Low Support Levels for Anti-E&S Proposals

Despite the high volume of submitted anti-E&S proposals, which increased from 16 in 2020 to 108 in 2024, support remains extremely low (median support of 1.7% of votes cast during the past three years), the report notes. ISS attributes this failure to the political nature of these proposals and lack of an economic argument.

Improvement in Corporate Practices 

Despite the decreasing support level for both E&S and governance and compensation, which might suggest a de-prioritization of these topics, the report highlights a steady enhancement in companies’ sustainability practices and disclosures—and in corporate governance practices and disclosure—particularly for S&P 500 companies.

Economic Impact Matters

Recognizing that there are numerous factors that can affect the success of shareholder proposals, ISS concludes by identifying two factors that have remained constant over the decades (and critical to shareholder proposal success): 

1. The extent to which the investment community recognizes the economic and business relevance of the topic in question
2. Whether companies sufficiently address the associated economic risk

Proposals that have instead focused on advocacy efforts or political positions have generally failed to gain broad shareholder support.