With ESG integration going mainstream, the annual proxy voting has become an essential tool for shareholder engagement on sustainability and governance issues. Asset managers are more open to vote against management on ESG issues given the tremendous scrutiny they are under to take voting actions that are aligned with their sustainability goals and pledges. This in turn puts pressure on management and boards to be more accountable for their actions.

The 2021 proxy season saw unprecedented support for ESG shareholder proposals, while pushback on executive compensation reached the highest level since at least 2015. In addition, directors are also seeing slippage in support, epitomized by the watershed moment faced by the oil majors. These trends are likely to intensify in the coming years as more investors put words into action on their sustainability pledges.