Anti-ESG wave in the US gathers momentum

The wave of anti-ESG sentiment in certain ‘Red’ states in the US is gathering pace and having an affect on shareholder activity at AGMs.

Data from the Sustainable Investments Institute, a non-profit data provider, showed that this year’s proxy voting season in the US saw a drop in support given to ESG-related shareholder proposals – from 36.6% average support last year to 23%. 

By contrast, support increased to 11.6% in Europe, up slightly from last year and over double the 5.5% recorded in 2021.

With ESG having become foregrounded in politics in the US over the past year, many see the drop as reflecting newfound wariness.

Many Republican states have pulled support from investment companies over their ESG measures, with anti-ESG messaging in the US political landscape likely to intensify as DeSantis, Florida governor and one of the leading critics of ESG, escalates his presidential campaign.

Some suspect the drop in support may reflect shareholder belief that companies have received the intended message and are taking more initiative on their ESG and reporting.

With some proposals designed to pressure companies rather than necessarily be used as a tool for driving fundamental changes, we may also see them fall out of fashion after two years of heavier usage, with shareholders losing interest in activist proposals that take more deliberately extreme positions.