The Brief: How shareholders can (and can’t) improve companies’ packaging performance

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This report explores the influence of shareholder activism on corporate packaging practices, particularly during the annual proxy season. With growing environmental scrutiny and investor interest in sustainability, it asks: can shareholder pressure meaningfully shift business behaviour, or are stronger regulatory levers required?

• Shareholder votes are advisory, not binding – Boards at companies like Amazon and General Mills routinely reject sustainability proposals, even when nearly half of investors support them.
• Disclosures often stall at transparency – Many companies respond to pressure by agreeing to report their plastic usage, but reporting doesn’t guarantee meaningful change.
• Success stories are rare but possible – Disney, for example, agreed to reduce plastics after pressure from Green Century Funds, showing dialogue and negotiation can yield results.
• Proxy fights and divestment have limits – While they draw attention, these more aggressive tactics can strain relationships and don’t always lead to policy change.
• ESG pressure can backfire – High ESG scores may mask inaction, risking greenwashing and reputational harm if companies overstate progress to satisfy investor expectations.
• Regulation is more reliable than persuasion – Experts and academics argue that real progress on sustainable packaging hinges on clear government mandates, not investor goodwill.

Shareholder activism can nudge companies toward greater transparency, but rarely drives bold reform on its own. Without regulation and consistent enforcement, packaging progress risks stalling in the realm of pledges and reports. For real impact, systemic oversight and stronger corporate governance must back up investor pressure.

After 40% of General Mills shareholders voted in favour of a sustainable packaging progress report, only for the move to be written off as ‘unnecessary’, we ask the question: how far can investors really influence a company’s sustainable packaging practices? We weigh up the options and their effectiveness in this edition of the Brief.

Every springtime, typically between April and June, companies preface their annual shareholder meetings by distributing proxy statements. These documents set out business matters to be voted on, which might include the election of board members, decisions surrounding executive compensation, and environmental or social considerations that may affect the company’s future.

If a shareholder cannot attend the upcoming meeting, they can instead vote by proxy. One option is to vote remotely, whether through an online system, via email, or over the phone. Alternatively, they can give a representative or company management the authority to vote on their behalf. In honour of this practice, the three months in question have come to be known as “proxy season”.

It is worth noting that shareholder votes aren’t binding and cannot force a company into action. For example, Amazon’s shareholders have repeatedly called upon its board of directors to issue a report committing to a complete transition into kerbside recyclable, reusable, or compostable packaging and setting an explicit, time-bound packaging reduction goal.

Despite nearly half of shareholders supporting the move, the board once again denied this request last year, arguing that it “already publicly report[s] on the amount of single-use plastic being used across [its] global operations network”.

General Mills’ board of directors gave a similar response to its shareholders; its 2024 proxy statement argued that “the Company already provides adequate transparency and reporting” and “provides shareholders with the information they need to assess our performance”. Further reporting is expected to “divert management’s time and company resources away from other efforts without providing any additional value to the company or its shareholders.”

Even so, shareholder votes have a certain level of influence over company decisions. Unhappy shareholders may decide to ‘divest’, or sell their shares; if this happens en masse, the increased supply could lower the stock price and affect the company’s market value. The financial impact on the company might not be catastrophic, especially not for industry giants like Amazon, but the number of shares up for sale could leave a dent in a company’s reputation and dissuade other investors from parting with their money.

Does shareholder pressure ever work?

In theory, the answer is yes. As shareholder advocate Douglass Guernsey explained to Grist, it is usually preferable for advocacy groups and companies to come to an understanding through dialogue; but a strategic alternative, especially when prior engagement fails, is for shareholders to file a resolution – a formal proposal to vote on a matter at the next annual meeting – then withdraw it if an outcome is negotiated before the meeting takes place.

Such was the case when The Walt Disney Company reached an agreement with shareholder advocates at Green Century Funds to publicly disclose the amount of plastics it uses in certain areas of business from this year onwards – coinciding with its existing goal to eliminate single-use plastics on its cruise ships by 2025. An additional plastic reduction goal is also set to be announced next year.

Filing a resolution allows shareholders to shed light on unresolved issues like unsustainable packaging practices. Since the information is made public, it can attract media attention to put further pressure on the company, with the potential bonus of prompting market competitors to make improvements before their own stakeholders can challenge them. In some cases, it can even alert regulators of ongoing industrial issues.

Widespread shareholder pressure on companies like ExxonMobil, Chevron, Shell, and BP previously revealed the lack of a standardized approach to disclosing climate-related financial risks. This, alongside other influences, led the Financial Stability Board to launch the Task Force on Climate-Related Financial Disclosures in 2015, and its expectations have since been integrated into legislation like the EU’s Corporate Sustainability Reporting Directive.

Such assertiveness might seem like a straightforward solution, but the reality is more complicated. Firstly, there are almost always factors at play beyond the scope of shareholders. Choice Hotels International is a case in point; it previously pledged to phase out single-use polystyrene products at its establishments by the end of 2023 – a target it has successfully reached – in favour of a complete transition into bulk amenities. By the end of this year, miniature bottles are set to be replaced with larger dispensers in a bid to reduce packaging waste.

However, the U.S. state of California has notably enforced a complete ban on miniature toiletry bottles at hotels. New York has followed suit for hotels with more than 50 rooms and will apply the rule to all establishments starting next year. New Jersey, Illinois, and Washington are considering similar legislation – meaning it is in Choice Hotels’ best interest to stay on top of the trend.

Similarly, Keurig Dr Pepper has expanded its chemical management policy to include PFAS, heavy metals, and bisphenols. While the Dutch Association of Investors for Sustainable Development previously coordinated 185 investors to raise concerns about harmful additives in its plastic packaging, the company also faced a lawsuit alleging that its Nantucket Nectars and Snapple products were labelled as ‘all natural’ despite containing PFAS. The case was later dismissed, but legal scrutiny may have been one of several factors driving the company to revise its approach.

Disclosure has clearly become a trend among shareholder voters, marking steps forward for transparency. Even now, 54% of independent shareholders at The Hershey Company support the company’s facilitation of a circular economy at end-of-life, and 40% at Restaurant Brands International back an As You Sow proposal to lessen its contribution to marine plastic pollution. Both are asked to assess the reputational, financial, and operational risks of continuing with business as usual and consider future procedures: redesigning or substituting packaging, endorsing EPR, making voluntary financial contributions to recycling infrastructure, etc.

Yet, as Green Century Funds president Leslie Samuelrich warns, “companies can report without taking steps to change their practice or policy.” Indeed, the retail chain Costco was persuaded to disclose the total plastic footprint of its in-house brand Kirkland Signature and unveil a five-year plan detailing its plans to reduce plastic waste. These developments were scheduled for July and December 2024, respectively, but they are yet to come to light.

The push to report could be considered the first step in a longer-term campaign to improve a company’s environmental practices, although some question the effectiveness of this approach. Even when the pressure works, climate-related disclosure requirements are still in development and standards remain unclear.

Research has linked higher ESG scores with a greater risk of greenwashing accusations due to discrepancies between reported and actual environmental performance, whether purposeful or due to a flawed scoring system. By setting ESG as the benchmark, investors may pressure their company to make misleading statements and affect its long-term reputation.

What is a win?

Perhaps we should question what successful stakeholder intervention really means. Depending on who we ask, it could range from performative conversations with no meaningful result, to the never-ending pursuit of the next sustainability milestone.

In their paper ‘Shareholder Activism and the Environment’, Michelle Rodrigue and Giovanna Michelon caution that some shareholders focus too much on extracting sustainability information and not enough on reforming harmful practices. This is not true across the board; ISS Insights recorded a record high of climate-motivated “vote no” campaigns in 2023. These entailed shareholders withholding votes for or voting against 107 American company directors, largely motivated by a history of unresponsiveness to stakeholder concerns.

However, ISS also noted that only two climate-conscious proposals were passed by company boards in 2023 – down from sixteen in 2022 – despite over 300 similar management and shareholder proposals being posed globally. Circumstances like these could give rise to more drastic action from unhappy investors.

In extreme cases, companies may face a proxy fight, also known as a proxy battle or contest. Stakeholders, or most often activist hedge funds, band together to replace some or all of a company’s board with their own candidates. PwC explains that these are ‘long, expensive and draining’ processes that require investment in legal fees, marketing campaigns, and consulting services.

Success isn’t guaranteed, but if stakeholders win the battle, they gain more influence over company decisions and could potentially amplify the voices of minority shareholders. Equally, it could cause tensions between stakeholders and company boards going forward, and it risks damaging the company’s reputation – not only among other investors, but also customers and consumers.

Resorting to divestment from uncompliant companies might help stigmatize environmentally damaging conduct more broadly, and serve as a symbolic demonstration of the shareholder’s own beliefs, but academia has not found evidence that it prompts a company to change its stance. It also becomes one less voice campaigning for change from inside the boardroom, which some consider ineffective activism.

All this assumes that every shareholder is driven by environmental concerns. Academics Warren Staples and Andrew Linden told The Conversation that shareholders generally “remain largely uninterested unless they are being hurt financially” – and giving all shareholders more influence over companies strengthens those who would put profit before the planet’s wellbeing.

Less cynically, 74% of board directors and senior executives for British, American, and Australian fashion brands and retailers told Aquapak Polymers that shareholder pressure to adopt more sustainable packaging had increased since 2021; fashion industry executives also recognized that failing to transition into more sustainable packaging designs could influence a decrease in market share, declining sales, and a negative impact on a company’s reputation.

Even so, most respondents (55%) only foresaw a slight increase in shareholder pressure to transition from plastics into alternative materials over the following three years, as opposed to a dramatic increase, stagnation, or decrease. Within the same time frame, 55% of executives expected their sustainable packaging progress to be ‘good’, as opposed to the 11% describing it as ‘excellent’ and 9% as ‘average’.

It seems, then, that stakeholders with genuine concerns for environmental progress are only part of a larger puzzle. Certainly, they can help push companies into making commitments to improve their packaging commitments, but this relies on the majority of investors valuing sustainability and pushing for ambitious measures – as well as board members’ willingness to listen.

Instead of relying on the bureaucratic process of voting or negotiating with companies, Staples and Linden argue that “what we really need is real corporate governance reform, better leadership from government, and regulatory oversight.” Such systemic change forces industry players to improve their packaging practices if they want to continue operating on the market, regardless of whether they align with environmentalist thinking – or, indeed, what their investors have to say about it.

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