Bosses of a raft of FTSE 100 companies, including Tesco PLC (LSE:TSCO) and Shell PLC (LSE:SHEL, NYSE:SHEL), have accused institutional shareholders of ‘grandstanding’ over their environmental, social and governance (ESG) policies.
What they say is a ‘formulaic approach' to the issues is causing struggles to emerge between the two groups, they added.
A report by financial PR company Tulchan found that executives felt investors’ use of third-party agencies to scrutinise their ESG policies ended up in generalisations being made, that did not consider individual circumstances.
One chairman explained: “There are some shareholders who are subcontracting some of their relationship with a board to the proxy agencies, particularly around the time of an AGM,” resulting in “blanket recommendations” to complex situations being made.
Meanwhile, investors are increasingly expecting companies to provide assurance of accurate ESG reporting, with many believing there should be more regulation on the matter, according to an early November survey by PwC.
Due to what was described as a "raft of regulation and interference," one respondent said firms are increasingly being put off from entering UK markets.
With the global economic downturn threatening businesses, ESG policies are becoming victims of spending cuts, according to the professional services network, KPMG.
It found 50% of CEOs were pausing or reconsidering planned ESG efforts for the next six months in an October survey, something investors are becoming weary of and often taking more action against.
Adding to this growing conflict between companies and shareholders over ESG policies is a lack of knowledge among the public about the schemes.
An October report, the annual SEC Newgate ESG Monitor, found that only 12% of UK citizens have a good understanding of ESGs, whilst 77% said they wanted corporates to consider their impacts on other people and the planet.