Greenwashing or Pragmatism?

Junxi Liu, Shaoting Pi and Ao Wang
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Junxi Liu: University of Warwick
Shaoting Pi: Iowa State University
Ao Wang: Universioty of Warwick

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: Shareholder support for environmental and social (ES) proposals increased by more than 50% between 2010 and 2020, yet the content of such proposals can vary substantially. We first document that there has been a large retreat in big-ask proposals (e.g., demanding operational changes for firms). The big-ask proposals fell from about 40% of ES ballots to roughly 5%, being replaced by small-ask proposals (e.g., requesting additional disclosure), and the increase in overall support rate is driven by favorable votes on small asks compared to big asks. However, we caution against interpreting these trends as greenwashing. Investigating both sides of shareholder democracy (proponents and voters), we develop and estimate a structural model in which ES proponents choose a portfolio of proposal types, anticipating vote outcomes. The model captures a feedback: changes in voting reshape the mix of sponsored proposals, and that mix, in turn, shapes observed support rates. Counterfactuals based on resubmission-style benchmarks suggest that the early part of the decade featured an oversupply of big-ask proposals and a moderate undersupply of small-ask proposals; the subsequent decline in big asks reflects an equilibrium correction toward small asks that are expected to receive meaningful support to generate incremental progress in ES. Therefore, the correction, along with growing voter support, suggests a shift towards a more pragmatic approach to ES issues rather than greenwashing.

Keywords: Corporate Governance; ESG, Shareholder Voting; Shareholder Proposals; Socially Responsible Investing; Sustainability JEL codes: G12; G14 (search for similar items in EconPapers)
Date: 2026
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