Annual meetings are the new frontline in the battle over corporate purpose

COMPANIES HAVE always had to answer to their investors. But these days shareholders have new questions—lots of them. On April 28th shareholders in three big drug companies, Johnson & Johnson, Moderna and Pfizer, are set to vote on resolutions filed by Oxfam, a charity, that seek to widen access to covid-19 vaccines. In May shareholders in Amazon are due to vote on a proposal from New York state’s pension fund, asking for an audit of the e-commerce giant’s policies on racial equity.

What has now come to be considered material, by some shareholders at least, is far more extensive than in the past. This year has brought even more social and environmental proposals, with those on climate up 42% from last year, as well as new resolutions that ask companies to square political donations with their stated corporate values. Most proposals seeking social and environmental changes still fail. But they are gaining more backing.

These large investors are particularly concerned about the threats from climate change—including physical impacts, energy shocks and the consequences of regulation. State Street this year expects all companies in major indices in America to disclose both direct and indirect greenhouse-gas emissions and targets for reducing them. But the firm’s interests do not stop at the climate.

Crucially, this year’s proxy season is also the first with new rules from Gary Gensler as head of the Securities and Exchange Commission , which oversees proxy voting. Some regulations remain a muddle. Litigation continues over a measure from 2020 that makes it harder for investors to resubmit failed proposals. Mr Gensler has proposed new rules that may complicate small dissidents’ courtship of big asset managers.

That highlights the main concern of critics of activism: that environmental and social proposals are more about values than actual value. Larry Fink, boss of BlackRock, defended stakeholder capitalism in his annual letter to chief executives this year. “It is not ‘woke’,” he wrote. “It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.

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