US groups critical of mainstream activist investor agendas have been ramping up efforts to use their influence as shareholders to sway corporate policies in a different direction.

So far, their efforts are continuing to fall flat with investors — a trend that stands in contrast to a push by Republican-leaning states to dial back investment policies they deem to be driven more by left-leaning ideological or political bias than financial considerations. With the 2023 proxy season now winding down, no such contrarian resolution has met a 5% threshold or been endorsed by management, observers say.

As of May 31, a total of 36 shareholder proposals targeting ESG strategies across a variety of industries had gone to a vote, according to data compiled by the Sustainable Investments Institute, or Si2. In sustainability parlance such proposals are often referred to as "anti-ESG" because they strive to limit corporate investments and strategies around environmental, social and governance policies that some see as detrimental to strong markets and fossil fuel industries.

Over the past two years, 69 anti-ESG shareholder proposals were voted on, up from 19 in 2020-2021. Still, less than 3% of shareholders on average voted in favor of these proposals, which means they cannot be resubmitted, Si2 data shows. First-time proposals need at least 5% of votes to get a second chance during the next year's proxy season.

"The anti-ESG proponents are making a whole lot of noise in state houses, but the most important people here, investors, are not going for this shtick," Heidi Welsh, Si2's executive director, said in an interview. "We see a lot more anti-ESG proposals but they're not getting any traction."

By contrast, pro-ESG proposals have on average received support from 23% to 32% of voters during the 2023 shareholder season, although interest seems to have waned a bit this year. As of May 24, just one environmental proposal and three social proposals had received majority support, according to a report by the proxy advisory firm Institutional Shareholder Services Inc.

The bulk of anti-ESG shareholder resolutions have focused on social issues, according to this year's Proxy Preview report published by Si2 and investor advocacy groups As You Sow and Proxy Impact. A few proposals also targeted the energy industry's decarbonization efforts.

At Duke Energy Corp., for example, a National Center for Public Policy Research proposal asking the company to evaluate risks associated with its emissions reduction plan garnered 2% of shareholder votes in early May. The same proposal at FirstEnergy Corp. on May 24 got just over 1%, filings with the US Securities and Exchange Commission show.

Another high-profile shareholder meeting on May 31 was at Chevron Corp., where investors voted on a resolution filed by Steve Milloy, an outspoken climate skeptic who served on former President Donald Trump's transition team for the US Environmental Protection Agency. His website JunkScience.com questions mainstream climate science.

Milloy's proposal called on the oil giant to rescind a resolution shareholders approved in 2021 to reduce the company's indirect Scope 3 emissions. The 2021 resolution forces Chevron to "sell less of the products it produces and from which it profits," Milloy's resolution said, adding that such a trajectory is inconsistent with Chevron's fiduciary duty to serve the financial interest of its investors. Chevron's board disagreed and asked shareholders to reject the proposal. In the end, 98.8% of votes opposed this measure, Chevron said.

Institutional investor votes 'stacked'

Proposals targeting corporate social policies have faced similar obstacles. At Amazon.com Inc., a National Center for Public Policy Research proposal requiring the company to do an annual cost/benefit analysis of its internal diversity, equity and inclusion programs received less than 1% of votes May 24.

Amazon recommended its shareholders vote against the proposal, saying that diversity, equity and inclusion "are cornerstones of our continued success and critical components of our culture." It also said it already has a process in place to monitor potential risks from such policies.

Scott Shepard, director of the National Center for Public Policy Research's Free Enterprise Project, called the results unsurprising.

Because institutional investors such as Vanguard Group Inc. and BlackRock Inc. control more than 59% of Amazon, it was virtually impossible for the resolution on the cost/benefit analysis to succeed, Shepard said in an interview. His group describes itself as a free-market conservative think tank.

"We have the institutional votes stacked against us," Shepard said. "There's still so few of us and there are so many corporations that moved away from their fiduciary duties in so many ways."

But Shepard added that "other ways" exist to challenge ESG policies "if we don't crack 5%."

Other shareholder proposals in the same vein can be introduced with different companies or, in a few years, with the same company, he said. Conversations with companies to try to influence them ahead of the proxy season will continue. Importantly, "other allies coming onboard" and bringing reinforcement, Shepard said.

'Content censorship'

The National Legal and Policy Center is one such conservative ally that in 2023 filed resolutions regarding "content censorship" with tech giants Alphabet Inc. and Meta Platforms Inc. as well as Amazon. The resolutions zeroed in on the companies' compliance with federal government requests that they take down content, as was the case with COVID-19 misinformation, Russian propaganda — and in the case of Amazon — the social media platform Parler, through which many protesters on Capitol Hill organized and communicated on Jan 6, 2021.

"Was Parler any worse than other platforms? Who is the arbiter of such things?" Paul Chesser, director of the National Legal and Policy Center's Corporate Integrity Project, wrote in an email. "I see incorrect information and 'propaganda' on the web all day every day from all kinds of sources, including corporate media. If government is going to decide who is guilty of platforming 'misinformation,' then they all need to be taken down."

The group's Amazon resolution got fewer than 2% of shareholder votes. The Meta and Alphabet shareholder votes were scheduled for May 31 and June 2, respectively. Results of the Meta votes were not immediately available.

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