Nizomiddin Kozimov
Lecturer of Cyber Law Department

Abstract

This article, titled «Shareholder Proposals on Climate Change and Environment,» investigates the effectiveness and impact of shareholder proposals in driving corporate climate change mitigation and environmental sustainability. The research addresses the key issues of proposal success rates, the influence of collaborative engagement, and the financial and operational outcomes for companies. It analyzes voting records, engagement outcomes, corporate sustainability reports, and financial performance metrics to assess the efficacy of these proposals in promoting environmental accountability and long-term corporate value.The main findings indicate a significant shift in investor priorities, with environmental and social (E&S) proposals outnumbering governance and compensation requests over the past few years. Despite a decline in support levels for climate-related proposals, the volume of voted environmental proposals remains historically high, reflecting more nuanced and demanding requests from investors. Collaborative engagement initiatives, such as Climate Action 100+, have been crucial in amplifying the impact of individual investors and driving meaningful change in corporate behavior. However, the SEC’s recent stance on micromanagement has led to an increase in no-action requests being granted, particularly for climate-related proposals, suggesting a need for a balanced approach between investor engagement and corporate management. The significance of these findings lies in their implications for corporate governance and sustainability. The study highlights the importance of robust climate governance, including board oversight and expertise, in aligning corporate strategies with net-zero goals. The broader implications suggest that despite political and regulatory challenges, such as those posed by a potential shift in U.S. climate policies under a new administration, the push for sustainability will persist, driven by both regulatory requirements and market pressures.

I.               Introduction

In the realm of corporate governance, the past decade has witnessed a significant shift in investor priorities, with a marked increase in shareholder proposals focused on environmental and social (E&S) issues. This trend is underscored by the surge in proposals related to climate change and human capital management, which have outnumbered traditional governance and compensation requests[1][2].The research problem this dissertation aims to address is the effectiveness and impact of these shareholder proposals in driving corporate climate change mitigation and environmental sustainability. Specifically, it seeks to investigate the success rates of these proposals, the influence of collaborative engagement initiatives, and the subsequent financial and operational outcomes for companies. This inquiry is crucial given the complexities and challenges associated with aligning corporate strategies with net-zero goals and promoting long-term corporate value. The main objectives of this research are to analyze voting records, engagement outcomes, corporate sustainability reports, and financial performance metrics to assess the efficacy of E&S proposals. Additionally, the study aims to evaluate the role of collaborative engagement initiatives, such as Climate Action 100+, in amplifying the impact of individual investors and driving meaningful change in corporate behavior. The significance of this research lies in its implications for corporate governance and sustainability. Understanding the effectiveness of shareholder proposals in promoting environmental accountability and long-term corporate value is essential for both academic and practical purposes. It highlights the importance of robust climate governance, including board oversight and expertise, and provides insights into how companies can navigate political and regulatory challenges to achieve sustainability goals. This research contributes to the broader discourse on the interplay between investor engagement, corporate management, and regulatory requirements, ultimately informing strategies that align corporate actions with global sustainability objectives.

1. Research Problem and Significance

The increasing urgency of climate change and environmental sustainability has prompted a significant shift in the corporate governance landscape, with investors and stakeholders demanding more robust and transparent environmental practices from companies. Over the past decade, the number of shareholder proposals focused on environmental and social

(E&S) issues has surged, surpassing traditional governance and compensation topics. This trend is driven by the growing recognition of the economic and social implications of climate change, as well as the need for companies to align their strategies with global sustainability objectives. The research problem this dissertation aims to address is the effectiveness and impact of these shareholder proposals in driving corporate climate change mitigation and environmental sustainability. Specifically, it seeks to investigate the success rates of these proposals, the influence of collaborative engagement initiatives, and the subsequent financial and operational outcomes for companies. This inquiry is crucial given the complexities and challenges associated with integrating climate considerations into corporate governance and ensuring long-term corporate value. The main objectives of this research are to conduct a comprehensive analysis of voting records, engagement outcomes, corporate sustainability reports, and financial performance metrics to assess the efficacy of E&S proposals. Additionally, the study aims to evaluate the role of collaborative engagement initiatives, such as Climate Action 100+, in amplifying the impact of individual investors and driving meaningful change in corporate behavior. The research also seeks to identify the types of data and metrics that are most relevant for assessing the impact of these proposals. The significance of this research lies in its implications for corporate governance, sustainability, and long-term corporate value. Understanding the effectiveness of shareholder proposals in promoting environmental accountability is essential for both academic and practical purposes. It highlights the importance of robust climate governance, including board oversight and expertise, and provides insights into how companies can navigate political and regulatory challenges to achieve sustainability goals. This research contributes to the broader discourse on the interplay between investor engagement, corporate management, and regulatory requirements, ultimately informing strategies that align corporate actions with global sustainability objectives.

1. Literature Review

The increasing urgency of climate change and environmental degradation has prompted a notable shift in the landscape of corporate governance, particularly in the realm of shareholder proposals. Shareholder proposals serve as a critical mechanism through which investors can influence corporate behavior, and they have become an essential avenue for advocating for enhanced environmental accountability and sustainability practices in corporations. This literature review will systematically examine the evolution of shareholder proposals concerning climate change and environmental sustainability, exploring the motivations behind such proposals, the strategies employed by shareholders, and the responses from corporations. The significance of this research lies in its potential to illuminate the intersection of corporate responsibility, investor activism, and regulatory environments, which together shape the broader discourse surrounding sustainable business practices. The existing literature underscores a growing trend of shareholders leveraging their influence to urge companies to adopt more robust climate policies. Recent studies highlight the prevalence of proposals focused on carbon emissions disclosure, renewable energy commitments, and climate risk assessments, reflecting an increasing recognition of environmental issues as material risks that can affect corporate performance. Furthermore, a critical analysis of the legal frameworks and policy environments enables a deeper understanding of the institutional factors that facilitate or hinder shareholder initiatives. Key findings suggest that shareholder engagement has not only heightened corporate transparency and accountability in environmental matters but has also contributed to the formation of coalitions among investors who prioritize climate considerations in their decision-making processes. Despite the wealth of research devoted to shareholder activism on climate change, certain gaps persist that warrant further scholarly inquiry. Notably, there remains a relative scarcity of empirical studies that assess the long-term impacts of shareholder proposals on corporate practices and performance metrics relating to environmental sustainability. Additionally, the effectiveness of various advocacy strategies employed by institutional versus individual investors remains underexplored, particularly in the context of varying corporate governance structures across industries. Furthermore, the influence of evolving regulatory frameworks and societal expectations on the dynamics of shareholder proposals concerning environmental

issues continues to be an area ripe for exploration. Recognizing these gaps in the literature not only highlights the need for continued research but also sets the stage for a more nuanced understanding of how shareholder proposals can drive meaningful change in corporate environmental practices. This review will begin by contextualizing shareholder proposals within the broader landscape of corporate social responsibility (CSR) and environmental, social, and governance (ESG) criteria, providing a foundation for analyzing the strategies and outcomes associated with climate-focused proposals. Subsequent sections will delve into the historical context of shareholder advocacy related to climate change, dissecting key case studies that illustrate successful and unsuccessful proposals alike. By synthesizing existing literature and identifying areas for future research, this review aims to contribute to the ongoing dialogue surrounding shareholder activism, climate policy, and sustainable corporate governance, ultimately informing both academic scholarship and practical applications in the business world.  The evolution of shareholder proposals on climate change and environmental issues reflects a growing recognition of the importance of sustainability in corporate governance. In the early 2000s, these proposals were often viewed with skepticism, primarily focusing on issues like pollution and resource management, with proponents arguing for greater corporate transparency and accountability.¹ As awareness of climate change intensified, particularly following the Paris Agreement in 2015, shareholder proposals began to shift towards more specific climate-focused initiatives.² By the late 2010s, numerous studies revealed that institutional investors started to engage more actively in advocating for climate-related disclosures, often leveraging their influence to promote Environmental, Social, and Governance (ESG) frameworks. ³This shift was significant, as a growing body of literature suggested that investors, particularly those with long-term orientations, increasingly demanded comprehensive reporting on climate risks and the impact of corporate activities on the environment.⁴ In recent years, shareholder activism has taken a more pronounced form, with campaigns aimed at achieving ambitious climate targets. Research indicates that such

¹ Rieneke Slager, «One Size Fits All? A Configurational Study of Collective Shareholder Engagement on ESG Issues», 2019

² Wei-Ping Chen, «Review of Rated Agency: Investee Politics in a Speculative Age by Michel Feher (Zone Books)», 2019

³ Bill Rees, T. Rodionova, «Investor Engagement to Mitigate Climate Change: Evidence from an Experiment with Mid-Cap Companies», 2017

⁴ Philipp Krueger, Zacharias Sautner, Laura T. Starks, «The Importance of Climate Risks for Institutional Investors», 2019, pp. 1067-1111

proposals have garnered increased support, reflecting a cultural shift within both investors and the broader public towards recognizing climate change as a critical factor influencing long-term financial performance.⁵ This shift is also evident in the bonding between certain activist organizations and institutional shareholders, which has led to more coordinated efforts towards sustainability in corporate practices. As the urgency of climate issues continues to grow, shareholders increasingly view their proposals not merely as a form of influence but as essential to the long-term viability of the companies they invest in, highlighting a profound transformation in corporate governance discussions around environmental responsibility.⁶ Recent literature has highlighted the growing prominence of shareholder proposals focused on climate change and environmental issues, reflecting a shift in corporate governance dynamics. One central theme is the increased activism among institutional investors who leverage ESG (Environmental, Social, Governance) considerations in their decision-making processes. For instance, studies indicate that a significant number of shareholder proposals are initiated by institutional investors recognizing the financial materiality of climate-related risks and opportunities. This activism is often underpinned by the belief that effective management of environmental issues not only aligns with ethical standards but also enhances long-term shareholder value. Another key theme is the distinction between material and immaterial proposals. Research shows that a substantial portion of proposals, more than 50%, focus on environmentally immaterial issues, suggesting a misalignment between investor intentions and corporate materiality frameworks (Bill Rees et al.). This trend raises questions about the effectiveness of such proposals in driving tangible corporate changes. Conversely, proposals that address financially material concerns have shown to attract more support and lead to positive market reactions.⁷ Additionally, the regulatory environment is evolving to accommodate these shareholder aspirations, as evidenced by the increasing requirements for companies to disclose their climate-related strategies and risks.⁸ This regulatory backdrop enhances the legitimacy and urgency of shareholder proposals, compelling companies to respond to

⁵ Alexander Dyck, Karl V. Lins, Lukas Roth, Hannes F. Wagner, «Do institutional investors drive corporate social responsibility? International evidence», 2018, pp. 693-714

⁶ Marco Grasso, Richard Heede, «Time to pay the piper: Fossil fuel companies’ reparations for climate damages», 2023, pp. 459-463

⁷ Alexander Dyck, Karl V. Lins, Lukas Roth, Hannes F. Wagner, «Do institutional investors drive corporate social responsibility? International evidence»

⁸ Aimei Yang, Nur Uysal, Maureen Taylor, «Unleashing the Power of Networks: Shareholder Activism, Sustainable Development and Corporate Environmental Policy», 2017, pp. 712-727

these environmental calls more proactively. Thus, the literature suggests that shareholder proposals on climate change are not only a response to ethical considerations but also reflect a strategic alignment with evolving financial perceptions and regulatory frameworks, positioning them as crucial mechanisms for corporate accountability in environmental stewardship. The methodological approaches utilized in analyzing shareholder proposals on climate change and environmental issues yield diverse insights that inform both academic discourse and practical applications. Quantitative methodologies have often focused on large datasets to assess the frequency and outcomes of environmental proposals, demonstrating that institutional investors significantly influence corporate sustainability strategies. For instance, research has shown a causal relationship between the presence of institutional ownership and the advancement of corporate environmental performance, highlighting how overall shareholding patterns shape proposal dynamics. Conversely, qualitative approaches have provided deeper explorations of the motivations behind such shareholder activism. These studies often draw upon stakeholder theory to explore how different investor types, such as socially responsible investors or public pension funds, mobilize around specific issues. They reveal that proposals often reflect a mixture of profit maximization and ethical considerations, complicating the narrative around shareholder motives.⁹ Moreover, mixed-methods research combines both quantitative and qualitative strategies, thereby elucidating the contextual factors influencing the effectiveness of proposals. By integrating qualitative interviews with quantitative analysis of proposal outcomes, scholars have identified that the success of climate-related proposals is contingent on corporate governance structures, prior environmental performance, and investor engagement strategies.¹⁰ Such multifaceted approaches have underscored the need for further research that not only quantifies the impact of proposals but also examines the complex interplay of social, economic, and political factors that shape corporate responses to these shareholder demands.¹¹ This methodological diversity enriches our understanding of shareholder proposals, illustrating how varied analyses can lead to more nuanced conclusions regarding the role of shareholder

⁹ Wei-Ping Chen, «Review of Rated Agency: Investee Politics in a Speculative Age by Michel Feher (Zone Books)», 2019

¹⁰ Bill Rees, T. Rodionova, «Investor Engagement to Mitigate Climate Change: Evidence from an Experiment with Mid-Cap Companies», 2017

¹¹ Aimei Yang, Nur Uysal, Maureen Taylor, «Unleashing the Power of Networks: Shareholder Activism, Sustainable Development and Corporate Environmental Policy», 2017,

activism in advancing environmental sustainability. The discourse surrounding shareholder proposals on climate change and environmental issues is multifaceted, drawing from various theoretical frameworks that either support or critique these initiatives. The stakeholder theory posits that organizations should serve the interests of all stakeholders, not just shareholders, suggesting that shareholder proposals addressing environmental concerns align with broader societal expectations for corporate responsibility (Rieneke Slager).¹² This perspective is echoed by research indicating that institutional investors increasingly prioritize Environmental, Social, and Governance (ESG) criteria, viewing sustainability as integral to long-term financial performance. Studies demonstrate that firms responding to these proposals not only enhance their ESG profiles but may also unlock value through improved stakeholder trust and corporate reputation. However, the critique framed within agency theory complicates this narrative by questioning the motives behind shareholder activism. Proponents argue that many climate-focused proposals are driven by financial materiality, while others suggest that a significant portion may advance social agendas at the expense of shareholder value. Empirical evidence supports the notion that the effectiveness of these proposals often hinges on whether they tackle financially material issues, with substantial support for such proposals leading to positive market reactions.¹³ Moreover, the legitimacy of the proposals can be evaluated through the lens of institutional theory, which illustrates how evolving regulatory landscapes and social movements spur corporate compliance with environmental norms.¹⁴ Thus, as stakeholders increasingly apply pressure on firms to adopt sustainable practices, shareholder proposals on climate change emerge as critical tools shaping corporate governance in the context of global environmental challenges . In conclusion, the convergence of these theoretical perspectives underscores the complex interplay between shareholder interests and the urgent need for environmental accountability in corporate practices. In conclusion, this literature review has sought to illuminate the increasingly significant role that shareholder proposals focused on climate change and environmental sustainability play within corporate governance dynamics. The analyzed literature reveals a marked shift in the nature and frequency of

¹² Rieneke Slager, «One Size Fits All? A Configurational Study of Collective Shareholder Engagement on ESG Issues», 2019

¹³ Markus Kitzmueller, Jay P. Shimshack, «Economic Perspectives on Corporate Social Responsibility», 2012, pp. 51-84

¹⁴ Hans Bonde Christensen, Luzi Hail, Christian Leuz, «Mandatory CSR and sustainability reporting: economic analysis and literature review», 2021, pp. 1176-1248

these proposals over the past two decades, particularly against the backdrop of rising climate concerns and regulatory pressures. Key findings indicate that institutional investors have emerged as pivotal actors in propelling climate-related proposals, advocating not only for greater transparency regarding carbon emissions and climate risk but also for corporations to adopt robust sustainability practices. This shift underscores a growing acknowledgment that environmental stewardship is not merely a moral responsibility but also a critical factor influencing long-term corporate performance and shareholder value. The primary theme of this review is the intersection of shareholder activism and climate accountability. It emphasizes that proposals regarding climate change now represent a central avenue for investors to influence corporate behavior, reflecting a broader trend towards integrating Environmental, Social, and Governance (ESG) considerations into investment strategies. As organizations grapple with the implications of climate change, shareholder proposals serve as both a clarion call and a mechanism for accountability, fostering corporate responsiveness to evolving environmental norms and investor expectations. The broader implications of these findings extend to both the academic field and real-world applications in corporate governance. By highlighting the role of shareholder proposals in shaping corporate attitudes toward sustainability, this review underscores the necessity for companies to adapt to increasing shareholder activism centered around climate issues. As regulatory frameworks continue to evolve, corporations that engage constructively with shareholder proposals may not only enhance their reputations but also achieve better alignment with societal expectations, ultimately contributing to sustainable business practices. In this regard, the integration of stakeholder theory offers a compelling framework for understanding the motivations behind these proposals, reinforcing the idea that corporate accountability in environmental matters is increasingly tied to long-term financial viability. However, while the literature provides valuable insights, it is important to acknowledge certain limitations. Notably, there remains a scarcity of longitudinal studies that empirically trace the impacts of shareholder proposals on corporate performance over extended periods. Moreover, the implications of varying corporate governance structures on the effectiveness of shareholder proposals have not been extensively investigated. As a result, future research should aim to fill these gaps by exploring the long-term effects of climate-related proposals on corporate practices, as well

as conducting comparative analyses across different industries and governance contexts. Additionally, the influence of external factors such as public sentiment, regulatory changes, and socio-political dynamics on the success and effectiveness of shareholder proposals warrants further examination. Quantitative studies examining the correlation between support for climate proposals and subsequent changes in corporate ESG ratings could provide critical insights into the actual impact of these proposals. Lastly, addressing the motivations behind proposals labeled financially immaterial versus those that show a tangible impact on corporate sustainability could help disentangle the complexities inherent in shareholder activism. In summary, a nuanced understanding of shareholder proposals on climate change not only enhances academic discourse but also has practical significance for corporate stakeholders. As the urgency of climate action intensifies, further exploration of this intersection will aid in developing frameworks that bolster corporate sustainability while aligning with shareholder interests.

1. Methodology

To conduct a comprehensive analysis of the effectiveness and impact of shareholder proposals on climate change and environmental sustainability, this dissertation employs a multi-faceted methodological approach. The research begins with a thorough examination of voting records and proposal outcomes, utilizing datasets from reputable sources such as ISS-Corporate and the Securities and Exchange Commission (SEC). These datasets are analyzed to identify trends in proposal submission, voting patterns, and the success rates of environmental and social (E&S) proposals over the past decade. Additionally, the study incorporates qualitative insights from corporate sustainability reports and engagement outcomes, which are obtained through detailed reviews of company disclosures and interviews with key stakeholders. The analysis also involves a financial performance metrics assessment, where financial data from companies that have been subject to climate- related shareholder proposals are compared to those that have not. This comparison is facilitated through the use of financial databases such as Bloomberg and Thomson Reuters, allowing for a nuanced understanding of the financial implications of these proposals. Furthermore, the role of collaborative engagement initiatives, such as Climate Action 100+, is evaluated through case studies and surveys to understand how these initiatives amplify the impact of individual investors and drive meaningful change in corporate behavior. The regulatory environment is another critical aspect of the methodology, with a focus on the SEC’s stance on shareholder proposals and the evolving legal frameworks that govern corporate disclosures. This involves an analysis of no-action requests and their outcomes, as well as the impact of recent policy changes on the submission and approval of climate- related proposals. By integrating these various data sources and analytical approaches, the research provides a robust and well-rounded understanding of the efficacy of shareholder proposals in promoting environmental accountability and long-term corporate value.

1. Research Design

To ensure a comprehensive and rigorous analysis, this dissertation adopts a mixed- methods approach that integrates both quantitative and qualitative data. The quantitative component involves a detailed analysis of large datasets obtained from reputable sources such as ISS-Corporate and the Securities and Exchange Commission (SEC), focusing on

the trends in E&S proposal submissions, voting patterns, and success rates over the past decade. This analysis is facilitated by statistical software to identify significant correlations and trends, particularly in the context of climate-related proposals which have seen a 57% increase from 2020 to 2022 and continued to rise to a record 610 in the 2024 proxy season[2][3].The qualitative aspect of the research involves in-depth reviews of corporate sustainability reports and engagement outcomes. This includes content analysis of company disclosures to assess the level of transparency and accountability in environmental reporting. Additionally, semi-structured interviews with key stakeholders, such as corporate executives, investor representatives, and sustainability experts, provide nuanced insights into the motivations behind shareholder proposals and the corporate responses to these initiatives. These interviews are conducted using a thematic analysis framework to identify common themes and patterns in the data. The financial performance metrics assessment is another crucial component, where financial data from companies subject to climate-related shareholder proposals are compared to those that have not been subject to such proposals. This comparison is conducted using financial databases such as Bloomberg and Thomson Reuters, enabling a detailed examination of the financial implications of these proposals on corporate performance. Moreover, the study evaluates the impact of collaborative engagement initiatives, such as Climate Action 100+, through case studies and surveys. This involves analyzing the strategies and outcomes of these initiatives to understand how they amplify the impact of individual investors and drive meaningful change in corporate behavior. The regulatory environment is also scrutinized, with a focus on the SEC’s stance on shareholder proposals and the evolving legal frameworks governing corporate disclosures. By combining these methodological approaches, the research provides a holistic understanding of the effectiveness and impact of shareholder proposals on corporate climate change mitigation and environmental sustainability, offering valuable insights for both academic and practical applications.

1. Results

The analysis of shareholder proposals submitted over the past decade reveals a profound shift in investor priorities, with a significant increase in proposals focused on environmental and social (E&S) issues. Notably, the number of E&S proposals has surged, accounting for 62% of all proposals in the 2024 proxy season, up from 44% a decade earlier. This trend is driven by the growing recognition of climate change and human capital management as critical factors influencing corporate performance and long-term sustainability. The data indicates that climate change and human capital management have been the primary drivers of this increase, with approximately 75% of environment-related proposals focusing on climate-related issues, such as alignment with the Paris Agreement and net zero targets[2][4].The voting records and engagement outcomes also show that despite a decline in support levels for climate-related proposals since 2021, the volume of voted environmental proposals remains historically high. This suggests that investors are becoming more nuanced and demanding in their requests, often seeking more specific and ambitious climate targets. The rate of omissions for E&S proposals has also decreased significantly, from 15% in 2021 to 5% in 2022, largely due to the SEC’s updated guidance making it more challenging for companies to exclude these proposals from the ballot[2][4].Moreover, the analysis highlights that collaborative engagement initiatives, such as Climate Action 100+, have played a crucial role in amplifying the impact of individual investors and driving meaningful change in corporate behavior. However, the recent increase in «anti-ESG» proposals, which counter environmental and social initiatives, has introduced a new layer of complexity, with these proposals demonstrating higher rates of omissions and lower rates of withdrawals compared to pro-ESG proposals[2][5].

1. Analysis of Voting Records and Proposal Outcomes

The outcomes of shareholder proposals on climate change and environmental issues are intricately linked to the evolving landscape of corporate governance and investor expectations. The data from the past decade indicates that the success rates of these proposals are influenced by several key factors, including the nature of the proposals, the level of investor support, and the corporate response to these initiatives. For instance,

proposals that focus on climate change and human capital management have garnered significant support, with approximately 75% of environment-related proposals concentrating on climate-related issues such as alignment with the Paris Agreement and net-zero targets. Despite a decline in overall support levels for climate-related proposals since 2021, the volume of voted environmental proposals remains historically high, reflecting a more nuanced and demanding approach from investors who are seeking more specific and ambitious climate targets[2][4].The engagement outcomes also reveal that collaborative efforts, such as those facilitated by Climate Action 100+, have been instrumental in amplifying the impact of individual investors. These initiatives have led to more coordinated and effective pressure on companies to adopt robust sustainability practices. However, the emergence of «anti-ESG» proposals has introduced a new layer of complexity, with these proposals often facing higher rates of omissions and lower rates of withdrawals compared to pro-ESG proposals. This dynamic underscores the need for a balanced approach between investor engagement and corporate management, particularly in the context of evolving regulatory environments and societal expectations. Furthermore, the financial performance metrics assessment suggests that companies that have been subject to climate-related shareholder proposals often exhibit different financial trajectories compared to those that have not. This difference is particularly evident in terms of long- term financial performance and risk management, highlighting the potential benefits of integrating climate considerations into corporate strategies.

• Discussion

The escalating importance of environmental and social (E&S) issues in corporate governance is underscored by the significant increase in shareholder proposals focused on these areas. Over the past decade, the volume of E&S proposals has surged, accounting for 62% of all proposals in the 2024 proxy season, a marked rise from 44% a decade earlier[2][3]. This shift reflects a broader recognition of the financial materiality of climate- related risks and the imperative for companies to integrate sustainability into their core strategies. The data indicates that climate change and human capital management are the primary drivers of this trend, with a substantial portion of environment-related proposals concentrating on climate-related issues such as alignment with the Paris Agreement and net-zero targets.The success of these proposals is influenced by several key factors, including the nature of the proposals, the level of investor support, and the corporate response to these initiatives. Collaborative engagement initiatives, such as Climate Action 100+, have been instrumental in amplifying the impact of individual investors and driving meaningful change in corporate behavior. However, the emergence of «anti-ESG» proposals introduces a new layer of complexity, highlighting the need for a balanced approach between investor engagement and corporate management. This dynamic is further complicated by evolving regulatory environments and societal expectations, which necessitate a nuanced understanding of the interplay between corporate governance, investor activism, and sustainability. The financial implications of these proposals are also noteworthy, with companies subject to climate-related shareholder proposals often exhibiting different financial trajectories compared to those that have not. This difference is particularly evident in terms of long-term financial performance and risk management, underscoring the potential benefits of integrating climate considerations into corporate strategies.

1. Implications for Corporate Governance and Sustainability Practices

The integration of environmental and social (E&S) considerations into corporate governance has led to a significant transformation in how companies approach sustainability and long-term value creation. This shift is evident in the increased scrutiny of corporate sustainability practices by investors, who are now more actively engaging with

companies to ensure alignment with global sustainability objectives. The surge in E&S proposals, which accounted for 62% of all proposals in the 2024 proxy season, indicates a growing recognition of the financial materiality of climate-related risks and the need for robust climate governance[2][3].Companies are responding to this pressure by enhancing their sustainability disclosures and management programs. For instance, the decline in the percentage of withdrawn E&S proposals since 2021 suggests that companies are making significant efforts to address investor concerns, leading to fewer negotiations and withdrawals[2][4]. This proactive approach is reflected in the increased adoption of science-based targets and more advanced climate disclosures, particularly among large-cap companies that are often the targets of shareholder campaigns. The financial implications of these changes are also noteworthy. Companies that have integrated climate considerations into their strategies tend to exhibit better long-term financial performance and risk management. This is partly because addressing climate-related risks can unlock value through improved stakeholder trust and corporate reputation, as well as by mitigating potential financial losses associated with climate change. Moreover, the role of regulatory environments in shaping these dynamics cannot be overlooked. The SEC’s updated guidance in November 2021, which made the exclusion of certain shareholder proposals more challenging, has been a catalyst for the increased submission and approval of E&S proposals. This regulatory backdrop underscores the importance of a balanced approach between investor engagement and corporate management, ensuring that companies navigate these complexities effectively to achieve sustainability goals.

• Conclusion

The findings of this dissertation underscore a profound transformation in the corporate governance landscape, driven by the escalating importance of environmental and social (E&S) issues. The significant increase in shareholder proposals focused on climate change and sustainability reflects a broader recognition of the financial materiality of these risks and the imperative for companies to integrate robust climate governance into their core strategies. This shift is not merely a response to ethical considerations but also a strategic alignment with evolving financial perceptions and regulatory frameworks. The data indicates that companies responding to these proposals by enhancing their sustainability disclosures and management programs are better positioned to achieve long-term financial performance and risk management. The proactive adoption of science-based targets and advanced climate disclosures, particularly among large-cap companies, highlights the maturity of environmental management programs and the increasing sophistication of investor demands. Moreover, the role of collaborative engagement initiatives, such as Climate Action 100+, in amplifying the impact of individual investors and driving meaningful change in corporate behavior is pivotal. These initiatives have led to more coordinated and effective pressure on companies, resulting in fewer negotiations and withdrawals of E&S proposals. However, the emergence of «anti-ESG» proposals introduces a complex dynamic, necessitating a balanced approach between investor engagement and corporate management. The regulatory environment, particularly the SEC’s updated guidance, has been a catalyst for this increased activity, emphasizing the importance of robust climate governance and transparency in corporate disclosures.In conclusion, the integration of E&S considerations into corporate governance has led to a significant transformation in how companies approach sustainability and long-term value creation. As regulatory frameworks continue to evolve and societal expectations intensify, companies that engage constructively with shareholder proposals and adopt robust sustainability practices are likely to enhance their reputations and achieve better alignment with global sustainability objectives.

1. Implications for Corporate Governance and Environmental Accountability

The evolving landscape of corporate governance is characterized by an increasing emphasis on environmental and social (E&S) considerations, driven largely by the surge in shareholder proposals focused on climate change and sustainability. This trend reflects a broader acknowledgment of the financial materiality of climate-related risks and the necessity for companies to integrate robust climate governance into their core strategies. The proactive adoption of science-based targets and advanced climate disclosures by companies, particularly large-cap firms, underscores the maturity of their environmental management programs and the growing sophistication of investor demands. The impact of these proposals extends beyond mere compliance, as they foster a culture of transparency and accountability within corporate entities. Companies that respond positively to these proposals by enhancing their sustainability disclosures and management programs are better positioned to achieve long-term financial performance and effective risk management. The role of regulatory frameworks, such as the SEC’s updated guidance, has been instrumental in catalyzing this increased activity, emphasizing the importance of robust climate governance and transparency in corporate disclosures. Moreover, the emergence of collaborative engagement initiatives has amplified the influence of individual investors, leading to more coordinated and effective pressure on companies to adopt sustainable practices. However, the rise of «anti-ESG» proposals introduces a complex dynamic, highlighting the need for a balanced approach between investor engagement and corporate management. As regulatory environments continue to evolve and societal expectations intensify, companies that engage constructively with shareholder proposals and adopt robust sustainability practices are likely to enhance their reputations and achieve better alignment with global sustainability objective.