Proxy season recap — and what's in store for 2024
Calvert continues to leverage our proxy-voting guidelines to advocate for progress on financially material ESG issues. Climate issues continue to be a primary investor concern, and in the most recent proxy season (2022-23) we voted in favor of climate proposals 83% of the time. However, we voted against say-on-climate management proposals more than 60% of the time because a large portion of companies' energy transition plans fail to meet our standards. In these cases, we first reach out to companies to explain our views.
Anti-ESG proponents were more active in filing resolutions during the 2022-2023 proxy season. The vast majority — 95% — of proposals from anti-ESG proponents were filed in the United States. However, these proposals received just 2.4% support, on average. Support levels this low mean the same resolution can't be refiled with the same company again the following year.
In the current 2023-24 proxy season, in addition to other areas of focus, Calvert will pay close attention to companies' energy transition plans, say-on-pay packages and governance around Board and Chair role separation. In evaluating energy transition plans, our focus will shift from target setting to actual progress made in emissions reduction. We will continue to hold directors accountable for poor disclosures, especially from high-emitting companies.
Calvert expects anti-ESG proponents will continue to try to roll back some of the progress made on material ESG issues over the past few years, such as public disclosure of US Equal Employment Opportunity data and climate action. For investors focused on getting companies to better address material ESG issues, we expect climate, lobbying and worker's rights, in addition to health and safety, to remain a priority.
Closing Diversity Gaps in the Corporate Pipeline
Calvert Research and Management recently released the third paper of our gender diversity series. In "Parity Beyond the Boardroom: Closing Diversity Gaps in the Corporate Pipeline," we discuss one of the top remaining global gender issues: the gap in the corporate talent pipeline. This issue contributes to structural disparities in pay and, ultimately, may further advance a wealth gap for underrepresented groups that is hard to close.
Our research shows that female representation at the board and employee levels is much higher than at the executive and senior management levels. Ethnic diversity is greater among lower-level employees than in senior positions at large-cap U.S. companies. Notable differences are observed among resource-based and service-based sectors for both gender diversity and ethnic diversity.
The trickle-down effect from increased gender representation in the boardroom, expected to help resolve the diversity pipeline issue, has not taken place as quickly as anticipated. We think this is largely due to national quotas driving the high percentage of female board directors, particularly in countries or markets that lag their peers.
As diversity gaps at the critical management and senior levels are not closing as quickly as expected, we believe investors and companies need to intensify their efforts to address this situation. We think companies that can close their diversity gaps sooner are more likely to benefit from a boost in their intellectual and human capital.
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