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ESG aspects at annual general meetings


The trend of placing ESG issues on AGM agendas continues. According to the UN Principles for Responsible Investment (PRI) initiative, 576 ESG-related resolutions were submitted in 2022, an increase of more than 15 percent from the previous year. But ESG resolutions are unevenly distributed globally, due to country-specific legal frameworks. Why should German companies nevertheless also address the issue?

by Michael Diegelmann

This article was published as a guest article in the HV Magazin 01/2023 by GoingPublic Media AG.

Higher hurdles for shareholders in Germany

Wiesbaden, 17. March 2023.

By international comparison, the hurdles for submitting resolutions on key sustainability issues – also known as “ESG Resolutions” in English – are high in Germany. Pursuant to Section 122 (2) 2 of the German Stock Corporation Act (AktG), a minimum share of 5 percent of the capital stock or a pro rata amount of 500,000 euros is required to put items on the agenda that are eligible for a resolution. In this respect, it is not surprising that no ESG resolutions can be found in the PRI database for companies with their registered office in Germany.

The situation is different in the USA, for example: According to PRI data, 3 resolutions have already been submitted for upcoming AGMs for the 2023 AGM season. The author of the resolutions is Follow This, an association of “green” shareholders with a focus on oil companies. Targeted by Follow This resolutions so far this year are Exxon Mobil, Chevron and Conocophillips. They are to align their greenhouse gas reduction targets with the Paris climate goals.

Even failed resolutions can make a big difference

However, despite the comparatively more difficult initial situation, there have also been some prominent examples in Germany in recent years of so-called activist investors seeking to oblige major corporations to be more sustainable by putting appropriate items on their AGM agendas. At last year’s AGM of RWE, the investor Encraft was able to force a vote on the spin-off of the energy company’s lignite division. The corresponding motion was ultimately rejected by the AGM, but the issue received a great deal of media attention – all the leading media such as Spiegel, FAZ and Handelsblatt reported on it. And RWE, possibly also due to Encraft’s action, actually announced at the end of the year that it would bring forward its planned lignite phase-out by 8 years to 2030.

This example is symptomatic for many other actions of investors like Encraft. Often, the resolution put on the AGM agenda is rejected, but in any case, the pressure on companies to respond to activist investors and their demands increases..

ESG resolutions bring voting advisors into the arena

In addition, companies need to be aware that introduced ESG resolutions bring to the fore issues that also attract the attention of a group relevant to AGMs: proxy advisors. They advise asset managers who manage the assets of asset owners and provide them with voting recommendations. In doing so, voting advisors are guided by predefined criteria set by asset managers. These criteria also increasingly include ESG aspects.

Transparency is what counts

It is therefore essential for issuers to transparently disclose their sustainability performance. The aforementioned documents must first verifiably depict the status quo – how high is the CO2 footprint, what is the company doing against child labor, is there a gender paygap within the company – as well as describe the sustainability strategy with which the company intends to improve its sustainability performance. With the Global ESG Monitor, which cometis AG developed together with KOHORTEN Sozial- und Wirtschaftsforschung GmbH & Co. KG, the transparency of corporate sustainability reporting can be made measurable. For the Global ESG Monitor, the ESG reporting of 350 companies was evaluated using 184 criteria with the help of a specially developed analysis tool, the GEM ASSAY™. Using this methodology, companies can have their transparency score determined and, based on the Global ESG Monitor data, compare their result with companies from their industry or benchmarks. The comparison reveals the gaps that companies need to close in order to improve their reporting. This also enables them to achieve better sustainability ratings or actively approach rating agencies while correcting incorrect ratings. Improving ratings in particular is a fundamental part of the sustainability strategy, as these are often the first and only source of information for investors, asset managers and proxy advisors on the sustainability performance of issuers.

Sustainability does not only mean environmental issues

While environmental issues dominate public and media perception, social and governance issues are also becoming increasingly important for investors submitting proposals at annual general meetings. Here, too, there are major differences between countries. For example, the issue of diversity has been on the agenda in the USA for much longer than in Germany, although it is also becoming increasingly important in this country. According to a study by the “Investors for Diversity” initiative, almost three quarters of the 30 most influential investors in Germany make demands on the diversity of the top bodies of German companies.

New laws strengthen governance powers of the Annual General Meeting

And the competencies of shareholder meetings are also increasing in legal terms: Since the Act Implementing the Second Shareholders’ Directive (ARUG II) comes into force in 2021, it has been mandatory for shareholder meetings to vote on executive board compensation and the underlying system (“Say on Pay”). As the variable remuneration components also increasingly include the achievement of sustainability targets, ESG aspects are also gaining in importance for the AGMs in this sense.


Sustainability has long since ceased to be a marketing issue and now affects companies in all areas, from their reporting and business and financing strategy to the annual general meeting. This makes it all the more important for companies to communicate their sustainability performance transparently in order to secure access to the capital market, remain compliant with the ever-increasing legal requirements – and be prepared for possible ESG resolutions and critical questions at the annual general meeting.

Michael Diegelmann: Founder and Board Member
Michael Diegelmann has taken over 50 companies public and gained experience in over 250 investor relations and ESG projects. He has been active in the field of capital market communications since 1997 and is a proven expert in ESG topics.