By Ross Kerber

Shareholder support for proxy resolutions on topics including climate change and workforce diversity dropped significantly this spring, analysts said, as tough proposals from activists met with growing political pressure on fund firms' voting.

Halfway through the shareholder annual meetings of Russell 3000 companies, average support for voted resolutions on environmental issues was 25% through mid-May, compared with 38% for all the prior proxy season ended June 30, 2022, and 43% for all of the prior year, according to shareholder engagement firm Georgeson.

Support for resolutions on social issues fell to 20% this year so far, from 26% in 2022 and 33% in 2021, Georgeson said.

"We've seen a dampening effect," said Georgeson Strategist Kilian Moote, since the drop in supports often reflected resolutions asking for steps investors deemed too burdensome.

He declined to discuss specific companies, but his description fit results like at major U.S. banks that defeated calls to wind down financing for major fossil fuel projects. At the same time, compromises with ESG advocates show executives still care about sustainability matters.

For instance, companies including Ford and eBay agreed to report more workforce details such as recruiting and retention rates in deals that led shareholder activist group As You Sow to withdraw resolutions before they were voted, said its CEO Andrew Behar.

Ford declined to comment. eBay did not return messages.

Behar added that new resolutions that got low backing stand to gain in coming years, such as a call on Exxon to account for divested assets in emissions reporting, which won 18% support. He also said Republican attacks on ESG likely depressed fund firms' support for many items.

"Their attorneys and compliance people would be saying, 'let's be a little more cautious this year'," Behar said.

Exxon did not respond to requests for comment.

State Street Global Advisors' global head of asset stewardship Benjamin Colton said via email that while companies have become more transparent, there have been more of what he called "overly prescriptive proposals."

"These dynamics have led to an overall decline in investor support for environment and social shareholder proposals," Colton said.

Other top asset managers, BlackRock and Vanguard did not comment for this story.

Both have previously said they vote on a case-by-case basis and noted an increasing number of proposals affect support rates.

Average support for resolutions filed by investors opposed to ESG fell to 6% from 9%, such as one from the free-market National Center for Public Policy Research calling for IBM to review its ESG record in China that won 7% support.

IBM declined to comment.

Scott Shepard, a director at National Center, said its resolutions still help demonstrate what he called the "partisanship" of top asset managers. Many now realize they need to take into account risks like pushing for decarbonization before new technologies are ready, he added.

"We're seeing that reflected in the numbers" in this year's voting results, he said.

(Reporting by Ross Kerber; Additional reporting by Sabrina Valle in Houston; Editing by Lincoln Feast.)