US Investors Digging in on ESG Engagement
US SIF warns of future infringements on American shareholder rights, but expects “muted” political impact on 2025 proxy season.
New US SIF Foundation data has revealed a strong commitment to sustainability-related stewardship activity among US investors, with any negative post-election impacts expected to manifest only after the upcoming proxy season.
The foundation’s biennial survey found that 79% of total US AUM (US$41.5 trillion) is subject to a stewardship policy, with a high proportion of survey respondents (60%) actively engaged in three or more related activities. More than three quarters (76%) said they conducted shareholder engagement activities, defined as liaising directly with investee company management teams or boards on sustainability or ESG matters.
In addition, 68% said they participated in proxy voting, with 60% joining investor coalitions on ESG or sustainability issues and 52% undertaking policy advocacy, including submitting comments on public policy consultations related to sustainability or ESG, or advocating at local, state and national levels.
Just under half (49%) said they participated in shareholder resolutions, including filing proposals for voting at company AGMs on sustainability or ESG issues.
Maria Lettini, CEO of the US Sustainable Investment Forum (US SIF), said the 2025 proxy season was likely to continue recent levels of robust dialogue between investors and companies on climate and other sustainability themes.
“All indications from proponents are that they will stay the course with continuing to file proposals, although it is possible that some may retool their requests,” she told ESG Investor.
The survey was conducted for the US SIF Foundation’s latest Report on US Sustainable Investing Trends, which found that 12% (US$6.5 trillion) of US AUM was identified or marketed as sustainable or ESG investments. US SIF said the 2024 figures represented a “new baseline”, due to the implementation of further changes to its methodology which build on revisions started in 2022.
Seventy three percent of the study’s 265 respondents expect the US sustainable investment market to grow over the next one to two years, but only 39% expect their own firms to increase sustainable investing. US SIF members represent US$5 trillion in AUM.
Political shifts
According to the Sustainable Investment Institute, average support for 308 pro-ESG proposals filed at US firms in 2024 declined to 20% from 21.8% the previous year. Only three proposals received more than 50% of the vote, but 12 earned between 40% and 49% and a further 47 garnered between 30% and 39%.
These levels remained “high enough to grab the attention of companies”, said Lettini. But she warned investors to expect future challenges to shareholder rights due to political shifts, even though their immediate impact would be limited.
“Since nearly all shareholder proposals already have been filed, and an SEC (US Securities and Exchange Commission) chair nominee has yet to be confirmed, the new administration’s impact on proxy season 2025 may be muted,” said Lettini.
Incoming US President Donald Trump has nominated Paul Atkins, a known supporter of minimal regulatory interference in market forces, to lead the SEC. If confirmed, Atkins is widely expected to raise the bar for SEC approval of shareholder resolution.
“The incoming chair may rescind Staff Legal Bulletin 14L and could issue a new more restrictive interpretive bulletin later in the year – but that will take time,” added Lettini.
“A bigger question relates to what might come out of Congress, and how investors respond to any efforts to curtail basic shareholder rights – including the right to file resolutions.”
Partial solutions
Declining support for ESG-related resolutions at US firms in recent years has been attributed in large part to asset managers’ increased caution.
BlackRock, the world’s largest asset manager, supported four out of the 161 shareholder proposals on climate and natural capital that it voted on in 2024, which compares with 37% support for environmental proposals in 2022.
US-based asset owners recently wrote to BlackRock, Vanguard, State Street and T Rowe Price, asking for explanations for the drop in their support.
US SIF’s Lettini described the development of voter choice offerings by large asset managers – which make it easier for shareholders to vote their shares in line with their own policies and preferences – as “encouraging”.
The increase in pass-through or split proxy voting offerings has been accompanied by a wider range of voting policy and stewardship options, including some which enable end-investors to prioritise profits.
“Pass-through voting is a partial solution for some, [but] it does not really address the basic issue of material risks raised in shareholder resolutions,” said Lettini.
“US investment managers are in a delicate position of having to address scepticism around their ESG consideration, as well as some clients who may share this view, while also serving a large number of asset owners who want them to consider material ESG factors in their proxy voting.”
The US SIF Foundation undertakes educational and research activities to advance the mission of US SIF, including offering trainings for advisors and other financial professionals.
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