Trends in Water-Related U.S. Shareholder Proposals

Ceres analyzed trends in public U.S. shareholder resolutions related to water that were filed between 2004-2017. The data were obtained from FundVotes and Ceres’ tracking system. A total of 338 resolutions were filed over the 13-year period, with 43 focusing on water as a central issue, and 295 focusing on water indirectly (e.g., a request for a sustainability report, mentioning water as a risk to be addressed in the report). Among the trends we observed:

• Proposals generally ask for increased disclosure, policies and/or action on a particular issue (such as coal ash management or agriculture water use), with the Energy and Consumer Staples industries receiving the most resolutions.
• Issues most often raised were the human right to water and sanitation, water risks and stewardship in agriculture supply chains, and fracking water risks.
• Proposals with the most successful outcomes (e.g., that receive high votes and/or elicit company attention) have focused on management of water risks associated with coal waste, natural gas hydraulic fracturing, or meat production. 
• Investors are increasingly asking companies to understand their obligations as stakeholders in mitigating impact and protecting water resources for the good of local communities and to respect human rights.  
   

 

Figure 1 Number of shareholder resolutions related to water per year in the United States, both focused directly on water as the central issue and indirectly when water is not in the resolve clause. Source: FundVotes and Ceres. See the full data set here.

Number of Resolutions by Industry Sector (Proposals Directly Addressing Water)

The sectors most often targeted by shareholders with direct resolutions on water risk were Energy, (accounting for 37 percent of resolutions) and Consumer Staples (25 percent), followed by a two-way tie between Utilities and Consumer Discretionary. Other sectors with notable amounts of shareholder resolutions on water include Health Care, Technology, and Financials.  

Figure 2 Percentage of shareholder resolutions with direct requests to companies related to water from 2004-2017 by GICS sector. There were 43 total direct resolutions over the time period. Source: FundVotes and Ceres analysis. 

Chevron took the lead in having the most water shareholder resolutions related directly and indirectly to water, including six asking for board-level environmental expertise and seven on water contamination impacts on indigenous communities. Exxon and ConocoPhillips were a distant second.

Resolution Type

Water-related resolutions ranged considerably in scope, but often sought to drive better disclosure, as well as water management practices and policies related to water quality and quantity used. Many resolutions asked companies to mitigate water impacts, both in direct business operations, and throughout their supply chains. 

The issues shareholders most often raised were the human right to water and sanitation, water risks and stewardship in agriculture supply chains and fracking water risks (Figure 3).  

(Fig. 3)The number of different types of direct and indirect water proposals by Topic. The shading indicates the average support over the 13 year period, with dark blue having the highest average, followed by light blue, orange and dark red.​

One of the fastest growing topics related to supply chain risks in agriculture. Eighty-four resolutions targeted the Consumer Staples and Consumer Discretionary Sectors, which include textiles, lodging and restaurants, retail and food and beverage companies. Big brands such as Coca Cola and PepsiCo are some of the most targeted companies for proposals related to board expertise and human right to water issues. A few instances in particular call out the conflicts these companies have faced in regions such as India. – where bottling operations closed due to community concerns of freshwater scarcity and lack of management.  

More recently meat companies such as Sanderson Farms, Pilgrim’s Pride, Smithfield and Tyson Foods have been the focus of investors asking for more transparent reporting on water and sustainability risks, along with improving their supply chain and water stewardship practices.  

Water quality issues are also rising as an issue with requests for disclosure of risks associated with bioaccumulative and toxic chemicals, to genetically modified organisms (GMOs), herbicide contamination and beyond. 

Proposal Outcomes

Some of the highest votes have been in response to proposals indirectly focused on water, such as a 95 percent vote in favor of Newmont Mining Corp releasing a report on its community policies and practices regarding waste disposal and water pollution. Similarly, 18 resolutions requesting sustainability reports, received an average vote of 42 percent, and a high of 93 percent (Layne Christensen Co.)

Other resolutions that have been relatively successful have focused on regulatory fines or spills and accidents related to coal, such as a vote receiving 53 percent with Ameren Corp on coal ash management. Resolutions related to reporting and transparency on water use in hydraulic fracturing (16 in total) have also been relatively successful, receiving an average vote of 36 percent as well as commitments from companies to produce reports disclosing their water risks and plans for mitigating them.   

Resolutions filed with meat companies on water quality have resulted in company action, such as Tyson’s 2017 announcement that it would set targets to reduce water impacts in its operations and supply chain. 

View the full data set here