The sustained pressure to enhance climate disclosures underscores the need for clear and consistent insights into climate performance, as well as the ability to benchmark ESG data against industry peers to optimize shareholder engagement.
“Regulatory developments are set to revolutionize how companies globally are held accountable for their ESG policies and practices,” said Josh Black, editor-in-chief at Diligent. “With a myriad of new requirements to juggle, it’s increasingly important for leaders to be proactive in addressing ESG-related risks and opportunities. This is especially true for those in high-risk sectors such as energy and utilities.”
The report, which is powered by Insightia’s newly launched ESG module in partnership with Clarity AI, reveals that Europe leads the world in Environmental and Social scores with average scores of 55 and 47, respectively. Meanwhile, the U.S. leads in Governance, with an average score of 70.
Other top findings include:
Scope 3 reporting goes global:
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Emissions-intensive sectors face sustained pressure to enhance their net-zero commitments, with climate change shareholder proposals winning 32.4% and 36.7% average support in the U.S. energy and aerospace/defense sectors, respectively, in the first five months of 2023.
- U.S. issuers are proactively preparing for Scope 3 reporting, with 63% of the 500 largest U.S. public companies currently voluntarily reporting on Scope 3 emissions.
Pressure mounts on issuers to enhance ESG disclosure:
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Although average support for E&S shareholder proposals appeared to fall over the last two years, the number that passed remains elevated and more ESG requests are being withdrawn for agreements. Twenty-six E&S proposals won majority support at S&P 500 companies in 2022, compared to 18 and 30 in 2020 and 2021, respectively.
- ESG metrics in compensation are increasingly the norm. Sixty-eight percent of 365 issuers surveyed in continental Europe and the U.K. in 2020 had at least one ESG metric in their incentive plans. Twenty-nine percent of FTSE 350 companies included at least one ESG metric in their executive compensation plans in 2019. This figure rose to 33% in 2021.
ESG activism out of favor with hedge funds:
- Rising inflation has placed ESG activism on the backburner for traditional activist hedge funds. 3.3% and 7.4% of environmental and social activist demands have been at least partially successful in the first five months of 2023, compared to 5.7% and 13.9% support, respectively, in the same period a year prior.
To download the full report click here.
About the report
Data from Insightia’s Activism, Voting, ESG, and Governance modules, as well as Diligent’s Compensation and Governance Intel (CGI) and Manzama solutions, run from January 1 to December 31, 2022. 2023 data is as of May 31, 2023. Further data is available on request.
About Diligent
Diligent is a leading GRC SaaS company that gives organizations the tools and solutions they need to bring clarity to complex risk, elevate impactful insights and get ahead of a world that is constantly changing. With solutions across governance, risk, compliance, audit and ESG, Diligent empowers more than 1 million users and 700,000 board members and leaders to make better decisions, faster. No matter the challenge. Learn more at diligent.com.
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About Insightia
Insightia, a Diligent brand since January 2022, is a leading SaaS provider of expert insights and intelligent analytics with a focus on shareholder activism, proxy voting and corporate governance. Through its web application, Insightia One, clients can access the most complete solution for listed company intelligence on the market, with broader and deeper insights than ever before.