by Hasina Razafimahefa.

This year marked a dramatic turning point in shareholder activism, with more majority votes on ESG proposals in a single year than we have ever seen.

Editor’s note: This article first appeared in our Q3 Active Ownership Report.

Proxy voting season this year reinforced and advanced some notable trends we’ve been observing across our 3 focus themes (human rights, inequality, and the energy transition), with a host of interesting and forward-thinking resolutions we were happy to support.

One of the fastest-growing categories of resolutions we saw was under our theme of inequality, with proposals tied to sub-themes such as racial equity, equitable compensation, diversity and inclusion, and equitable access. We attribute the sharp increase of such proposals to the propulsive and far-reaching influence of George Floyd’s murder and the concomitant resurgence of racial activism, as well as the effects of the COVID-19 pandemic related to management’s treatment of employees, specifically frontline workers.

We found that companies overall did not have an adequate response to these proposals, which led us to support nearly all 52 we voted on. More than two-thirds of the proposals called for more equitable compensation practices and actions around diversity and inclusion, while the remaining third focused on equitable access and human capital management. One novel proposal we supported asked target companies to conduct a racial equity audit and report on findings. The proposal affected 8 companies in our funds*, including Amazon, Johnson & Johnson, JPMorgan Chase, and Citigroup.

On the human rights front, we supported 15 of the 20 proposals we voted on (we abstained from the others). Technology companies such as Alphabet and Facebook faced several proposals related to governance and human rights aimed at enhancing disclosure on matters such as how well the company is assessing and mitigating content-related challenges. At Amazon, 2 proposals that focused on surveillance services and facial recognition technology received over 30% support, a clear indicator that shareholders are taking these burgeoning issues seriously and want companies to get it right.

We supported a novel proposal regarding Indigenous rights—the only one in this area. The proposal asked TMX Group to report on policies and practices around Indigenous community relations, recruitment and advancement of Indigenous employees, internal education, and procurement from Indigenous-owned businesses. The aim of the proposal was to improve disclosure on public companies’ actions toward reconciliation. We commend TMX Group management for supporting the proposal, which received 98% support—a welcome rarity. But it’s not just the nature of the resolutions that have made 2021 so important in the world of proxy voting, or even the sheer volume (we voted on 101 environmental and social shareholder resolutions). This year marked a dramatic turning point in shareholder activism, with more majority votes on ESG proposals in a single year than we have ever seen. It’s a shot across the bow for boards of directors that have been dragging their feet on any number of urgent ESG issues. We welcome this shift as a greater number of shareholders exercise their rights as active owners, and we anticipate the pressure on companies to do more and do better will only increase, for the benefit of all stakeholders.

*Shares of companies named were held as of the date of the respective 2021 annual general meeting; holdings are subject to change without notice.