In addition to big picture Q2 voting and engagement statistics, State Street’s newly released Stewardship Activity Report details the bases for its trending decline in support for E&S shareholder proposals generally, and climate proposals, specifically.
This bar chart depicts the decline in support from 49% of climate-related shareholder proposals in 2021 to 32% in the first half of 2023 (through June 30):
State Street indicates that it has not changed its voting approach or philosophy; however, the volume of climate-related shareholder proposals has increased year over year (i.e., 1H23 compared to 1H22), while the topics, nature, and targeting of proposals have also evolved. At the same time, companies’ disclosures have improved.
During the 2023 proxy season, we generally did not support climate-related proposals in which:
· The proposal requested specific disclosures which are not yet market practice or for which industry consensus, reporting frameworks and regulatory requirements have not yet been established.
· The requested disclosure was overly prescriptive in nature or not deemed decision-useful for investors.
· The company already provided sufficient disclosure in line with general market practice and our expectations.
· The company demonstrated progress over the past year on enhancing disclosure in line with our Guidance on Climate-related Disclosures and/or our Guidance on Disclosure Expectations for Effective Climate Transition Plans and committed to continued progress.
Elaborating on the prescriptiveness component, State Street indicates it voted against 30 of 30 shareholder proposals that requested operational changes, such as the phase-out of a product or business line over a finite period, increased/decreased investments, or decommissioning assets, as opposed to requesting enhanced disclosure. It also elected not to support the same or similar recurring proposals filed with the same companies that have improved their disclosure and favorably responded to engagement.
State Street’s support for management’s recommended directors has trended down over the past several years, predominantly due to director independence concerns.
The report reflects 12,564 meetings and 134,514 proposals voted, with North America constituting approximately 25% of the voting.