$100bn investor coalition fights SEC on shareholder resolutions

Institutional investors representing more than $100bn (€73bn) in assets have launched a campaign of action against proposals by the US Securities and Exchange Commission (SEC), which they say could undermine their corporate engagement rights. The investors, organised by the US Social Investment Forum (SIF) and the Interfaith Center on Corporate Responsibility (ICCR), a coalition of nearly 300 faith-based institutional investors, representing over $100bn in invested capital, aim to encourage 500 institutions and thousands of retail shareowners to flood the SEC with e-mails pushing for it not to alter the rights of US investors to lodge non-binding shareholder resolutions.
In May this year, the SEC started a consultation process to test whether non-binding resolutions were compatible with US federal laws and to examine if on-line shareholder/management chat rooms might be a better method for investors to speak with companies on issues of concern. The SEC has set an October 2 deadline for submissions on the topic. The investor coalition says shareholders’ rights to set non-binding shareholder resolutions are under threat. They say the SEC is pandering to corporate lobbyists who claim thatnon-binding resolutions from shareholders are a costly and time-consuming distraction from running businesses. Corporations are not obliged to act on non-binding shareholder resolutions – hence the name – but they are seen by investors as a cost-effective tool for challenging company management. The email template for individual investors to send to the SEC and to the US government, reads: “I oppose any action by the Securities and Exchange Commission to weaken the rights of Americans to present resolutions for votes by the millions of investors like me who own stock in companies.”
Tim Smith, chairman of the US Social Investment Forum and senior vice-president of Walden Asset Management, said: “We strongly oppose proposals at the SEC to either eliminate the shareholder resolution process or make it more difficult to sponsor resolutions. We also oppose any step to make it more difficult for investors to help nominate directors. Shareholder advocacy is vitally important in communicating with corporate boards, management and other investors on key issues such as climate change, governance reforms, employee diversity, executive compensation, and human rights in overseas factories.”