Actions by climate protection and human rights groups have been commonplace for many large companies in and around annual general meetings (AGMs) in the past. Organizations like the Association of Critical Shareholders (Dachverband der Kritischen Aktionärinnen und Aktionäre) have regularly presented counterproposals at chemical and energy companies as well as banks for decades. These proposals address ecological and sociopolitical issues and advocate redirecting parts of the balance sheet profit into alternative projects. They also serve as a way to hold management and supervisory boards accountable through the discharge resolution.

Opposition has been articulated not only within the meeting hall but also in the vicinity of shareholder meetings. While it wasn't yet common to glue oneself to the streets, the chemical company BASF, for instance, once found itself compelled to clear several tons of potatoes dumped by opponents of genetically modified potatoes (Amflora) outside the Congress Center Rosengarten in Mannheim. Methods like pie-throwing and nude protests, more commonly associated with political conventions or demonstrations. But this is something that supervisory boards and shareholders nowadays also need to prepare for, as witnessed in the recent case of Volkswagen. Such incidents might reinforce the preference among organizational representatives for virtual AGM formats, even if the pie attack at VW missed its mark.

With sustainability regulation, the ESG (Environmental, Social, and Governance) issue has gained more momentum within AGMs. A greater number of NGOs committed to the common good are actively engaged in these matters. Fund management companies are also broadening their range of topics, increasingly demanding ESG objectives, with a strong focus on governance. There have been some convergences between these groups. For example, Greenpeace has enlisted the expertise of Mauricio Vargas, a financial expert who previously worked for Union Investment. He scrutinizes the climate promises of German fund management companies and provides in-depth analyses to institutional investors.

Newly emerged are activist shareholders jumping on the ESG bandwagon, aiming to increase the value of companies and their own profits through relatively short-term investments. They turn the annual general meeting into a stage and increasingly use ESG issues as leverage to exert pressure, replace supervisory boards, or demand structural measures. Companies need to be prepared for this.

The politicization of AGMs underscores the importance of ESG competence within corporate bodies and particularly in supervisory boards, which represent the shareholders after all. Unfortunately, there still seems to be a misalignment between external perception and self-assessment. While supervisory boards often self-assess their competence with high ESG expertise in surveys, investor representatives criticize the underestimation of sustainability issues in supervisory boards, highlighting the lack of necessary expertise in many cases.

Executives and supervisory boards are well-advised to pay close attention to the entire spectrum of ESG issues. It will play an increasingly significant role in AGMs: from decisions on executive compensation to the Say-on-Climate, a shareholder vote on a company's climate strategy already prevalent in the UK and France. From a regulatory perspective, the noose is tightening. With the planned EU Supply Chain Act and the Corporate Sustainability Due Diligence Directive, due diligence obligations will be significantly intensified. What's critical here is that, for the first time, a specific link between ESG and the duties of the board of directors and supervisory board is legally established, outlining civil liability for the representatives. It's only a matter of time until this becomes part of German corporate law.