In a Law360 article, Michael Littenberg, partner and global head of Ropes & Gray’s ESG, CSR and Business and Human Rights practice, discussed the evolution of U.S. Securities and Exchange Commission guidance regarding the omission of environmental, social and governance proposals from proxy statements, and in turn companies’ approaches to those proposals.
Michael explained that companies often think about these proposals holistically, as they weigh other considerations in deciding whether to negotiate out a proposal, accept the substance of the proposal so it is withdrawn, seek to omit the proposal, or recommend a vote against a proposal.
Looking at the bigger picture, Michael noted that ESG-related proxy proposals are just one tool that stakeholders use to promote particular goals on either side of the political aisle. He observed the vast majority of the proposals do not pass, and are not designed to. Instead, they are intended to create greater awareness around issues and to encourage companies to take particular action, irrespective of passage. By that measure, many of the proposals are successful.
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