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Nuveen’s 2023 Proxy Season Preview: Proxy Voting Can Help Companies Integrate ESG into Corporate Decision-Making

Companies are beginning to shift away from making ESG commitments solely to improve external ratings and more toward disclosing how specific ESG strategies and measurements are influencing their business decisions – a trend that investors can encourage via proxy voting, says the 2023 Proxy Season Preview released today by Nuveen, the asset manager of TIAA.

Nuveen’s annual Preview looks to greater targeting of directors, continuing focus on greenhouse gas (GHG) emissions targets, and careful examination of pay equity as key market themes that will shape this year’s investor agenda and proxy voting trends.

Avoiding “Unintended Consequences”

Proxy voting is one of the only systematic and comparable investment-focused perspectives that stakeholders have into asset managers’ assessment of a company’s ESG (environmental, social, and governance) program, the Preview notes. However, incentivizing leadership based on third-party “leaders/laggards lists” or other superficial metrics can have the unintended consequence of favoring short-term stewardship proof points over long-term stakeholder progress.

“The 2022 proxy season reinforced our view that ESG issues can present material risk to investors. While overall support for E&S proposals declined, a record number still received majority support. This shows that investors are beginning to coalesce around ESG standards of best practice, and they remain willing to support proposals that focus on improving transparency and accountability,” said Amy O’Brien, Nuveen’s Global Head of Responsible Investing. 

“To encourage companies to continue integrating ESG into core business strategies, investors must show evidence of bringing enhanced disclosure into the investment process,” said Peter Reali, Managing Director, who leads Responsible Investing’s engagement efforts. “Proxy voting can be one avenue where investors can signal to companies either an understanding or a lack of understanding – and either acceptance or disapproval -- of positive ESG momentum or an ESG strategy that is projected to create or hinder long-term value.” 

Among the other trends highlighted in this year’s Preview:

Nuveen’s 2023 Proxy Season Preview can be viewed here.

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Responsible investing incorporates Environmental Social Governance (ESG) factors that may affect exposure to issuers, sectors, industries, limiting the type and number of investment opportunities available, which could result in excluding investments that perform well.
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