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Wednesday, December 1, 2021

U.S. Securities and Exchange Commission relaxes voting channels for shareholder petitions of U.S. companies

U.S. companies will find it harder to stop climate change and human rights petitions in annual shareholder vote Variety In the Securities and Exchange Commission.

U.S. regulators on Wednesday revoked shareholder policies adopted during the Trump administration. This move is a victory for environmentalists and other socially conscious investors who submitted resolutions to force the company to reform its business practices.

Previously, the US Securities and Exchange Commission stated that companies can exclude shareholder climate proposals that require them to provide specific timetables and greenhouse gas emission targets. But in the future, “we will not agree to exclude similar proposals that propose goals or timetables, as long as these proposals give management discretion on how to achieve these goals,” the US Securities and Exchange Commission said.

Regarding human rights and other social issues, the SEC stated that it is unlikely to pay attention to the relationship between the issue and a particular company. On the contrary, when deciding whether a shareholder’s proposal should be voted on, “[SEC] Employees will consider whether the proposal raises issues with wide-ranging social impact, thus going beyond the normal business of the company.”

The US Securities and Exchange Commission stated: “Proposals that employees previously considered exclusive because they didn’t seem to raise policy issues of importance to the company may no longer be considered exclusive.”

Josh Zinner, chief executive of the Interfaith Center for Corporate Responsibility of the Faith Investor Alliance, said that changes in the US Securities and Exchange Commission will make proxy voting favor those who submit shareholder resolutions.

“This definitely means that more resolutions that have already been submitted will apply to company agents,” he said.

Large asset management companies BlackRock, State Street and Pioneer have recently supported more environmental and social shareholder proposals. Sinner said that because of their participation, the company “may be more willing” to reach a settlement with shareholder activists instead of letting the petition vote.

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Companies often ask the US Securities and Exchange Commission to approve the closure of these proposals, often arguing that they were made by the Gadfly and inappropriate micromanagement attempts.

In October, Apple asked the SEC to block six shareholder proposals, covering issues ranging from alleged forced labor to how to decide which apps to remove from its App Store. When a shareholder petition falls on the agency’s allowable exclusion list, SEC staff usually approve the company’s request.

During President Donald Trump’s tenure, the US Securities and Exchange Commission tended to support the company’s proposal to exclude shareholders. But since Joe Biden took office, the agency has taken a stance that is more receptive to investors.

“The right to submit proposals to other shareholders for voting is an important part of the securities law,” Said Gary Gensler, Chairman of the SEC.

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