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When investors want a company to change its ways on environmental or social practices, what makes shareholder proposals on these issues fare well, and when do they fall flat? Three characteristics appear to be correlated with scoring high levels of support for so-called E+S proposals: targeting, sponsor, and timing, according to “Growing Traction for Environmental & Social Shareholder Proposals at U.S. Companies,” a new paper from IRRC Institute. “Proponents’ targeting strategy, the type of lead proposal sponsor, and the connection between the proposal and current events are the three characteristics that appear to have a particularly high impact on how much attention, support, and momentum are attached to a proposal,” the study states. Based on primary research by Ernst & Young, the study examines nearly 1,300 shareholder proposals that came to a vote at Russell 3000 companies from 2005 to 2011. All the proposals had to do with E+S topics, which range from the sale of arms and animal testing to corporate political spending, sustainable forestry, and tobacco-related health risks. As the paper notes, E+S proposals on average don’t get as much support as other types of shareholder proposals, such as those on a company’s corporate governance, which averaged more than 50 percent support in 2011. However, IRRC finds that, overall, there was an uptick in E+S investor support during the time period studied. “During 2005–2011, the proportion of shareholder-sponsored resolutions on E+S topics grew by a third, from about 30 percent to 40 percent of all shareholder proposals going to a vote,” according to the analysis. “At the same time, average support for these proposals rose from about 10 percent to more than 20 percent.” The proportion of “higher-scoring proposals” has also increased. In 2005, only 3 percent of E+S proposals got more than 30 percent support, whereas by 2011, nearly a third of E+S proposals crossed that threshold. Some proposals did particularly well: 66 secured support rates of 40 percent and above. The breakdown by topic of the highest-supported proposal looks like this:

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