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Comments to SEC on Shareholder Proposal Regulations

The Securities and Exchange Commission (SEC) proposed a rule that would limit investors’ ability to propose shareholder resolutions for a vote by fellow shareholders. The rule would raise requirements on the amount of stock required to be owned, impose requirements for the length of time the stock must have been held, and make it harder to resubmit resolutions that had failed to reach majority support in prior years. We submitted comments critiquing the rule, which will limit shareholder monitoring and likely have an outsized impact on shareholders’ role in environmental oversight.

Shareholder proposals related to environmental, social, and governance (ESG) issues have increased in frequency and support in recent years, particularly those seeking climate change related disclosures and emissions targets. The SEC fails to account for the significant harms of limiting shareholder voice, especially for those passive investors that cannot exit firm ownership. Our comments further detail how the rule does not appropriately consider that transparency of proxy voting enables individual investors to monitor investment fund fiduciaries.