November 19, 2021 Read More →

SEC shift on shareholder resolutions victory for environmental activists

S&P Capitol IQ ($):

With the 2022 proxy season ramping up, a recent decision by U.S. Securities and Exchange Commission staff to return more influence to investors has already yielded some early shareholder successes.

The SEC issued a legal bulletin Nov. 3 that rescinded restrictions the Trump administration imposed on shareholder resolutions. Over the course of three years, the SEC under Trump made it gradually harder to challenge corporate strategies on climate change, diversity, lobbying and other issues of keen interest to many investors today.

Within two days, retail giant Costco Wholesale Corp. told the SEC that “in light of recent relevant guidance from the Staff” it would withdraw its challenge to a proposal by Green Century Funds that Costco adopt short-, medium- and long-term greenhouse gas emission targets. As a result, the proposal will go to a vote at the company’s annual shareholder meeting in January.

“This is really a victory for the proponents ” Heidi Welsh, executive director of the Sustainable Investments Institute, said of the recent SEC staff decision. “It means companies have less ground for objection to shareholder proposals. In the past under the SEC, 2018 and onward, asking for specific greenhouse gas goals was unacceptable.”

It is still too early to say whether more proposals will be filed or what topics will dominate during the 2022 proxy season, but the general sense is that recently emboldened shareholders will not pass up the opportunity.

“We would not be surprised to see more proposals this season,” Michael O’Leary, managing director of activist investment firm Engine No. 1, wrote in an email. “Shareholder voting is an important way for investors to hold companies accountable — and investors shouldn’t waste the power of their votes.”

[Karin Rives]

More: New SEC guidance emboldens shareholder activists as 2022 proxy season ramps up

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