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The SEC opened the floodgates, qualifying more shareholders to issue proposals and allowing more proposals to appear on proxies. Conservative groups have capitalized on this opportunity, to the point it has not been uncommon to see three, four, or even more shareholder proposals on the proxy of large, targeted firms. Some of these proposals seek to directly change the bylaws of companies, especially when it came to global warming and firms’ contribution to greenhouse gas emissions. 

For example, 12 climate-related shareholder proposals were issued for Exxon, including one to “establish a scope 3 target and reduce hydrocarbon sales”. Since Scope 3 includes indirect emissions such as those generated by Exxon’s customers who burn oil and gas, Exxon would effectively be required to reduce its oil and gas sales and introduce new lines of revenue. This proposal, and all 12 others, lacked enough votes to pass at Exxon.

Investment firms can expect more complex and high-stakes shareholder proposals that are reputationally and financially risky for investors. Even a small fund or pension that does proxy voting in-house will need to consider the need to hire a small team to handle this ever-growing, high-risk burden.