Environmental, Social, and Governance

For or Against? The Year in Shareholder Resolutions—2021

April 27 2022

With environmental and social proposals in the spotlight, case-by-case insights were key to our decision making.

Key Insights

  • Many proposals, particularly those relating to environmental and social issues, demanded a nuanced approach to our voting rationale.
  • For environmental proposals, improving the level and quality of company disclosure remains our primary objective.
  • Distinct classifications of proposals provide a useful framework for understanding how we arrived at our voting decisions.

Shareholder Resolutions Voted on in 2021

(Fig. 1) Digging deeper into E&S resolutions

Shareholder Resolutions Vote

Chart shows the number of shareholder resolutions we voted on in 2021 by proposal topic. For “Social and Environmental Resolutions,” we classify the proposals into 5 distinct categories.

* Share-blocking is a requirement in certain markets that impose liquidity constraints in order to exercise voting rights. We generally do not vote in these markets.

As of December 31, 2021.

Source: T. Rowe Price.

For the second year, we have published a deep-dive analysis of our voting results on shareholder resolutions of an environmental or social nature. Shareholder resolutions can be an important tool to persuade companies to increase their focus on key societal challenges. The year 2021 presented a range of themes for consideration, and our approach to each was guided by careful attention to the likely outcomes within our well-tested framework.

In 2021, the T. Rowe Price portfolios1 voted on 1,0982 shareholder resolutions across all markets. Of those, 403 were situations where shareholders were nominating directors to a company’s Board. Another 372 were resolutions asking companies to adopt a specific corporate governance practice. Here, we focus on the 323 remaining proposals that specifically addressed environmental and social (E&S) issues. We classify these proposals into five distinct categories, as illustrated above.

Our overall framework for integrating ESG factors into the T. Rowe Price investment process—which includes proxy voting—is research centered. Its purpose is to produce investment insights for our internal teams of analysts and portfolio managers. As a global asset manager serving clients with different perspectives, beliefs, time horizons, and investment goals, it is not our objective to build our investment strategies around a specific set of values. Instead, our objective is to apply different lenses (environmental, social, ethical, and governance) to deepen our understanding of the investments held in our funds.

The quality, intent, and utility of shareholder resolutions on ESG matters are highly variable at this time. Some well-targeted resolutions are extremely helpful in persuading companies to strengthen their management of certain risks, leading to improved outcomes for investors. Other resolutions are not helpful—we would even call them harmful—if the objectives of the proponent do not align with economically oriented, long-term investors. This is why we believe that the most responsible approach to voting such resolutions is to apply the thoughtful, investment-focused framework we have discussed in the report.

For more information on voting rationale, oversight of proxy voting at T. Rowe Price, and a review of alignment between corporate and investment perspectives on climate risk, download the full report.

Includes funds/separate accounts across all regions.

Source: T. Rowe Price, as of December 31, 2021.

Important Information

Call 1-800-225-5132 to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information you should read and consider carefully before investing.

This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of March 2022 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.

Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.

Past performance is not a reliable indicator of future performance. All investments are subject to market risk, including the possible loss of principal.

International investments can be riskier than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as specific country, regional, and economic developments. There is no assurance that any investment objective will be achieved. All charts and tables are shown for illustrative purposes only.

T. Rowe Price Investment Services, Inc., distributor, T. Rowe Price mutual funds. T. Rowe Price Associates, Inc., investment adviser.

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