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The Proxy Preview team today released highlights of the unprecedented 2021 proxy season, which saw nearly three dozen majority votes for disclosure and action on environmental, social, and sustainable governance (ESG) shareholder resolutions.
To date, there have been 34 majority votes for ESG proposals, shattering last year's record of 21. More are likely by year's end. Last year, only two votes broke 70%, while this year 17 did. Eight were in the 80s and six saw more than 90% support. Four of the six that received more than 90% were supported by management -- a first for U.S. environmental and social resolutions. More importantly, other high-scoring proposals were opposed by management but still earned huge support.
"This has been an extraordinary year with record high votes for climate change, diversity, and political spending issues," said Michael Passoff, CEO of Proxy Impact and co-author of Proxy Preview. "Shareholder proposals about the COVID-19 pandemic and sexual harassment also received majority votes, while new proposals on racial justice gained unusually high support."
"The slew of majority votes suggests investors at large see ESG as material," said Heidi Welsh, Executive Director of the Sustainable Investments Institute (Si2) and co-author of Proxy Preview. "Evidence from the financial markets seems to contradict the intent of new SEC rules that will make it harder to file and resubmit shareholder proposals in 2022," Welsh added, noting that the SEC's own analysis showed most individuals will not be able to sponsor proposals at all.
"Looking ahead, the question now is how companies will implement changes to their policies and practices in response to these high votes, and how investors respond if they don't," said Andrew Behar, CEO of As You Sow and report publisher. "This year we saw three out of four dissident directors elected at ExxonMobil after shareholders lost patience with its inaction on climate change. All boards have been put on notice this could happen to them."
Top votes include:
Political Spending: Proposals about the ways in which companies influence the political system accounted for the largest group of majority votes -- 14. The top votes were for more election spending oversight and disclosure with 80.6% at Netflix and 80.1% at Chemed. A resolution asking for a report about climate change lobbying and advocacy, both directly and indirectly through trade and other associations, won 76.4% at Norfolk Southern, while the top vote for more generalized disclosure on lobbying was 66.3% at GEO Group.
Climate and environment: Eight climate change proposals earned more than 50% and resulted in the two highest votes of the year. Investors gave 98.8% support for reporting on supply chain deforestation impacts at Bunge and 98% for reporting on net-zero GHG goals at General Electric -- though management supported both. Yet votes were extraordinary even with management opposition, hitting 81.2% in favor for more disclosure on plastics pollution at DuPont de Nemours, 80.3% for adopting greenhouse gas (GHG) emission goals at Phillips66, 76.2% for reporting on deforestation in the supply chain of Bloomin Brands, and 60.7% for cutting GHG emissions from oil and gas products sold by Chevron.
Diversity: The national debate over racial justice made itself known in proxy season by many more proposals about diversity in the workplace and executive suite, and on boards, with nine majorities. At the top were a resolution asking IBM for details on the effectiveness of diversity, equity, and inclusion programs (94.3% with management support), one asking Paycom Software about executive diversity (93.7% after management did not take a position), and 91.2% for more board diversity at First Solar despite a recommendation against it by the board. Board diversity also received 85.3% at Badger Meter, while a call for EEO-1 data disclosure earned 86.5% at Union Pacific, where a request for diversity program data also received 81.4%.
COVID-19: Concerns about the pandemic were at the heart of the third highest vote this year. Although Wendy's tried to keep a proposal about reporting on pandemic worker safety off the proxy ballot with an SEC challenge, it failed and in the end the company supported the proposal--prompting a 95.2% vote.
Sexual Harassment: A resolution on mandatory arbitration-which can hide sexual harassment problems-received 53.2% at Goldman Sachs and even more (59.4%) at solar panel maker Sunrun.
Racial Justice: Although they did not receive majority support, two new proposals about conducting racial justice audits received unusually high support for first-year resolutions, with 44.2% at Amazon.com and 40.5% at JPMorgan Chase.
As You Sow is the nation's non-profit leader in shareholder advocacy. Founded in 1992, we harness shareholder power to create lasting change that benefits people, planet, and profit. Our mission is to promote environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies.
"They want to cut and privatize Social Security and take away our young people's futures," said Democratic Rep. Pramila Jayapal.
Former Vice President Mike Pence, a possible 2024 presidential candidate, has voiced support for a Social Security privatization scheme that the George W. Bush administration unsuccessfully pushed nearly two decades ago.
In a closed-door event Thursday hosted by the National Association of Wholesale-Distributors, a corporate trade group, Pence said he believes that "the day could come when we can replace the New Deal with a better deal, literally give younger Americans the ability to take a portion of their Social Security withholdings and put that into a private savings account that the government would oversee."
"I mean, a very simple fund that could generate 2% would give the average American twice what they're going to get back on their Social Security today. And it could save the government money doing it," Pence said, according to video footage obtained by the Democratic-aligned group American Bridge 21st Century.
\u201cMike Pence calls for privatizing Social Security for young people as a way to cut spending on public benefits. "We could replace the New Deal with a better deal," he told a conference of business executives.\u201d— More Perfect Union (@More Perfect Union) 1675466552
Experts have forcefully rejected the notion that private savings accounts of the kind Pence endorsed—which would allow workers to divert a portion of their payroll tax contributions into private investment accounts—would be more beneficial than Social Security's guaranteed benefits, as the former vice president suggested.
"The popular argument that Social Security privatization would provide higher returns for all current and future workers is misleading, because it ignores transition costs and differences across programs in the allocation of aggregate and household risk," Olivia Mitchell, John Geanakopolos, and Stephen Zeldes—economists sympathetic to the idea of privatization—wrote in a 2000 paper.
Experts have also said private accounts would not, as Pence put it, "save the government money."
In 2005, analysts with the Center on Budget and Policy Priorities (CBPP) estimated that a privatization plan put forth by former Sen. John Sununu (R-N.H.) and former Rep. Paul Ryan (R-Wis.) would "create $85.8 trillion in additional debt (equal to 93.7% of GDP) by 2050" while not boosting Social Security's long-term solvency—something Republicans claim they want to do.
"Creation of a system of private accounts would not change the amount of revenue coming into the federal government, but it would increase government spending, because the federal government would be making regular payments into the private accounts," the CBPP analysts explained. "These payments would represent new government spending. This increase in spending, unaccompanied by an increase in revenues, would widen annual deficits."
Despite the myriad drawbacks of private accounts as a partial or full-scale alternative to Social Security, Republicans have continued to promote them.
Last year, the Republican Study Committee—a panel that Pence chaired during the Bush administration—released a budget proposal that urged lawmakers to "consider legislative options that allow employers and employees to reduce their payroll tax liability and use those savings to invest in private retirement options."
Pence's remarks Thursday came as the White House and House Republicans are locked in a high-stakes standoff over the debt ceiling, which the GOP does not want to raise without also inflicting steep cuts to federal spending.
"Republicans keeping saying the quiet part out loud: They want to cut and privatize Social Security and take away our young people's futures," Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, tweeted late Saturday. "Democrats will never let this happen."
"Doctors' sense of our complicity in putting profits over people has grown more difficult to ignore."
A U.S. physician took to the op-ed pages of The New York Times on Sunday to offer a scathing condemnation of the country's for-profit healthcare system and his profession's historical complicity in campaigns against universal coverage.
"Doctors have long diagnosed many of our sickest patients with 'demoralization syndrome,' a condition commonly associated with terminal illness that's characterized by a sense of helplessness and loss of purpose," wrote Eric Reinhart, a physician at Northwestern University. "American physicians are now increasingly suffering from a similar condition, except our demoralization is not a reaction to a medical condition, but rather to the diseased systems for which we work."
"The United States is the only large high-income nation that doesn't provide universal healthcare to its citizens," Reinhart continued. "Instead, it maintains a lucrative system of for-profit medicine. For decades, at least tens of thousands of preventable deaths have occurred each year because healthcare here is so expensive."
The coronavirus pandemic accelerated that trend and spotlighted the fatal dysfunction of the nation's healthcare system, which is dominated by a handful of massive corporations whose primary goal is profit, not the delivery of care.
According to one peer-reviewed study published last year in the Proceedings of the National Academy of Sciences, a universal single-payer healthcare system could have prevented more than 338,000 Covid-19 deaths in the U.S. from the beginning of the crisis through mid-March 2022.
"In the wake of this generational catastrophe, many healthcare workers have been left shaken," Reinhart wrote Sunday. "One report estimated that in 2021 alone, about 117,000 physicians left the workforce, while fewer than 40,000 joined it. This has worsened a chronic physician shortage, leaving many hospitals and clinics struggling. And the situation is set to get worse. One in five doctors says he or she plans to leave practice in the coming years."
"To try to explain this phenomenon, many people have leaned on a term from pop psychology for the consequences of overwork: burnout. Nearly two-thirds of physicians report they are experiencing its symptoms," he added.
But for Reinhart, the explanation lies more in "our dwindling faith in the systems for which we work" than in the "grueling conditions we practice under."
What has been identified as occupational burnout is a symptom of a deeper collapse. We are witnessing the slow death of American medical ideology.
It's revealing to look at the crisis among healthcare workers as at least in part a crisis of ideology—that is, a belief system made up of interlinking political, moral, and cultural narratives upon which we depend to make sense of our social world. Faith in the traditional stories American medicine has told about itself, stories that have long sustained what should have been an unsustainable system, is now dissolving.
During the pandemic, physicians have witnessed our hospitals nearly fall apart as a result of underinvestment in public health systems and uneven distribution of medical infrastructure. Long-ignored inequalities in the standard of care available to rich and poor Americans became front-page news as bodies were stacked in empty hospital rooms and makeshift morgues. Many healthcare workers have been traumatized by the futility of their attempts to stem recurrent waves of death, with nearly one-fifth of physicians reporting they knew a colleague who had considered, attempted, or died by suicide during the first year of the pandemic alone.
Although deaths from Covid have slowed, the disillusionment among health workers has only increased. Recent exposés have further laid bare the structural perversity of our institutions. For instance, according to an investigation in The New York Times, ostensibly nonprofit charity hospitals have illegally saddled poor patients with debt for receiving care to which they were entitled without cost and have exploited tax incentives meant to promote care for poor communities to turn large profits. Hospitals are deliberately understaffing themselves and undercutting patient care while sitting on billions of dollars in cash reserves.
Acknowledging that "little of this is new," Reinhart wrote that "doctors' sense of our complicity in putting profits over people has grown more difficult to ignore."
"From at least the 1930s through today, doctors have organized efforts to ward off the specter of 'socialized medicine,'" he wrote. "We have repeatedly defended health care as a business venture against the threat that it might become a public institution oriented around rights rather than revenue."
Confronting and beginning to solve the myriad crises of the U.S. healthcare system will "require uncomfortable reflection and bold action," Reinhart argued, and "any illusion that medicine and politics are, or should be, separate spheres has been crushed under the weight of over 1.1 million Americans killed by a pandemic that was in many ways a preventable disaster."
"Doctors can no longer be passive witnesses to these harms," he concluded. "We have a responsibility to use our collective power to insist on changes: for universal healthcare and paid sick leave but also investments in community health worker programs and essential housing and social welfare systems... Regardless of whether we act through unions or other means, the fact remains that until doctors join together to call for a fundamental reorganization of our medical system, our work won’t do what we promised it would do, nor will it prioritize the people we claim to prioritize."
Reinhart's op-ed came as the prospects for legislative action to transform the U.S. healthcare system appear as distant as ever, despite broad public support for a government guarantee of universal coverage.
With the for-profit status quo deeply entrenched—preserved by armies of industry lobbyists and members of Congress who do their bidding—the consequences are becoming increasingly dire, with tens of millions uninsured or underinsured and one health crisis away from financial ruin.
In a study released last month, the Commonwealth Fund found that "the U.S. has the lowest life expectancy at birth, the highest death rates for avoidable or treatable conditions, the highest maternal and infant mortality, and among the highest suicide rates" among rich countries, even as it spends far more on healthcare than comparable nations both on a per-person basis and as a share of gross domestic product.
"Not only is the U.S. the only country we studied that does not have universal health coverage," the study added, "but its health system can seem designed to discourage people from using services."
China's Ministry of Foreign Affairs said the U.S. military's move, ordered by President Joe Biden, "seriously violates international convention."
"The Chinese side clearly requested that the U.S. appropriately deal with this in a calm, professional, and restrained manner," the ministry said, again dismissing the Pentagon's claim that the high-altitude balloon was part of a surveillance operation aimed at monitoring sensitive military sites.
"For the United States to insist on using armed force is clearly an excessive reaction that seriously violates international convention," the ministry continued, invoking force majeure, which under international law refers to unforeseen circumstances that are beyond a state's control. China has claimed the balloon was a civilian weather research aircraft that was blown way off course by unexpected winds.
"China will resolutely defend the legitimate rights and interests of the enterprise involved, and retains the right to respond further," the ministry concluded.
War hawks in the Republican Party, including former President Donald Trump, predictably reacted with hysteria to the Pentagon's Thursday announcement that it detected the balloon over the state of Montana.
"President Biden should stop coddling and appeasing the Chinese communists. Bring the balloon down now and exploit its tech package, which could be an intelligence bonanza," said Sen. Tom Cotton (R-Ark.), one of the most vocal warmongers in Congress. "And President Biden and Secretary Austin need to answer if this was detected over Alaskan airspace. If so, why didn't we bring it down there? If not, why not? As usual, the Chinese Communists' provocations have been met with weakness and hand-wringing."
An unnamed Pentagon official said Saturday that this latest incident is one of several times a Chinese balloon has been detected in U.S. airspace in recent years. The other balloons were not shot down.
"[People's Republic of China] government surveillance balloons transited the continental United States briefly at least three times during the prior administration and once that we know of at the beginning of this administration, but never for this duration of time," the official said in a briefing with reporters.
Tensions between the U.S. and China have risen sharply in recent months, largely over Taiwan. The Biden administration recently announced that it is expanding the U.S. military's footprint in the Philippines, a move widely characterized as a message to China.
As The New York Timesreported Thursday, "A greater U.S. military presence in the Philippines would... make rapid American troop movement to the Taiwan Strait much easier. The archipelago of the Philippines lies in an arc south of Taiwan, and the bases there would be critical launch and resupply points in a war with China. The Philippines' northernmost island of Itbayat is less than 100 miles from Taiwan."
Rep. Michael McCaul (R-Texas) said late last month that the odds of a U.S. war with China within the next two years are "very high," echoing the assessment of the head of the Air Mobility Command.
Far from promoting diplomatic talks with China, Republicans in Congress appear bent on ratcheting up tensions further—and some Democrats are joining them. Last month, with overwhelming bipartisan support, House Republicans established the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party.
Upon her appointment to the panel on Thursday, Rep. Mikie Sherrill (D-N.J.) called the Chinese Communist Party "a threat to our democracy and way of life" and said the select committee represents the "best opportunity to accomplish real results for Americans and respond to China's aggression."
Rep. Mike Gallagher (R-Wis.), the chair of the select committee, has said the panel's goal is to help the U.S. "win this new Cold War" with China.
Nearly two dozen House progressives issued a statement last month opposing the formation of the committee, saying the U.S. "can and must work towards our economic and strategic competitiveness goals without 'a new Cold War' and without the repression, discrimination, hate, fear, degeneration of our political institutions, and violations of civil rights that such a 'Cold War' may entail."