Very few Environmental or Social proposals are brought to the shareholder meetings of retailers, according to new research by financial think tank Planet Tracker.
- Of the 1,198 ESG proposals submitted to the annual shareholder meetings of retailers in the Planet Tracker Textile Universe since 2015, 87% were on Governance issues. Social proposals were 11% and Environmental only 2%.
- A small number of shareholder proposals on textiles sustainability issues have been advanced at various corporates over the past few years, but all have been voted down.
The Study: The report, Under-dressed: Investors need to up their engagement on textiles, has been authored by Richard Wielechowski, Senior Investment Analyst (Textiles), Planet Tracker; Christopher Baldock; Head of Data Methodology, Planet Tracker; and Nicole Kozlowski, Head of Engagement, Planet Tracker.
- Planet Tracker is a non-profit financial think tank producing analytics and reports to align capital markets with planetary boundaries. Textiles Tracker investigates the impact that financial institutions have in funding publicly listed companies across the textiles and apparel sector.
Not Important: The analysis found that key issues such as fibre mix do not appear to make annual shareholder meetings. It found no proposals including the words fibre, fibre, textiles, material, biodiversity, toxic, deforestation, polymer, polyester, PET, clothing, cotton or synthetic.
The Methodology: The study has examined Proxy Insight data for 350 publicly listed corporate entities allocated to the retail node of the Planet Tracker Textiles Universe.
- Proxy Insight tracks proposals brought to annual general meetings (AGMs)/annual shareholder meetings and extraordinary general meetings (EGMs) and the results of votes taken. Proxy Insight provides six voting categories: for, against, abstain, did not vote (DNV), withheld and split.
Voting Trends on ESG Issues: The investigation found that the number of ESG-related proposals submitted at annual shareholder meetings between 2015 and 2022 has shown a rising trend, with a peak in 2020 (around 200).
- There has been a rising trend, with 26 proposals in 2022 being the highest number since 2015. Most of this growth has come in Social proposals, with Environmental proposals remaining limited (only six in 2022).
- The most common type of proposals were: Approving political contributions; creating a political/lobbying report; and, creating a Social Report.
- The most common environmental proposals voted upon since 2015 were: Create climate change report (8 proposals); Include sustainability as a performance measure for remuneration (5 proposals); and, Approve sustainability report (4 proposals).
The Way Forward: The report concludes that the textiles industry needs to make significant changes to move to a sustainable model and calls on investors to promote corporate focus on two priority areas:
- Fibre mix: Moving the industry towards a more circular fibre mix rather than synthetic fibres based on fossil fuels which are heavily relied on by the industry.
- Supply chain investment: Much of the environmental damage associated with textiles occurs in the “hidden” supply chain. Fashion brands must work with suppliers to lessen environmental impact.
