US SRI investors wary of new Chamber of Commerce corporate governance coalition

Corporate Governance Coalition for Investor Value launched earlier this month

US SRI investors have raised concerns about a new corporate governance group of business associations formed by the U.S. Chamber of Commerce that has said “special-interest activism with idiosyncratic campaigns” is damaging corporate value.

The group, the Corporate Governance Coalition for Investor Value, includes high-profile business associations such as the American Bankers Association and the Securities Industry and Financial Markets Association (SIFMA). It announced its formation in a letter to Mary Jo White, chair of the Securities Exchange Commission, earlier this month in which it outlined its aims and offered to work with the SEC on good corporate governance policies.

The coalition aims to provide a forum for its business association members to advocate for federal securities laws and strong corporate governance policies, with the group stressing the latter is important to provide investors with appropriate returns.

The letter explains that companies’ communication and engagement with shareholders is at an “all-time high” with an “an exponential rise in the frequency of special-interest activism of all types” with idiosyncratic agendas unrelated to increasing long-term value for shareholders. The letter adds that the “traditional role of the board of directors in overseeing management of the enterprise has been eroded”.

Andrew Behar, CEO of As You Sow, a US group which promotes shareholder advocacy, said the “special-interest activism” criticised by the Coalition probably referred to SRI investors. Talking to Responsible Investor, Behar noted that SEC Commissioner Daniel Gallagher used similar language when he controversially criticised activist ESG shareholders last year.

Behar said: “In his speech, Gallagher was trying to restrict the right of shareholders to express their views and we took that quite seriously.”He continued: “There are a lot of reactionary organisations involved with the coalition. The name is the opposite of its intent. It’s a coalition to take away investor value.” He added: “We are taking this very seriously. It is a threat to the right of shareholders to express ourselves.”

“We are taking this very seriously” – As You Sow

Timothy Smith, director of ESG Shareowner Engagement at Walden Asset Management, the SRI investment firm, said his peers were watching the group closely.

He said: “US investors who are active in engaging with companies on ESG issues are watching with interest to see if this new coalition challenges the rights of shareholders to address these issues.”

Corporate Governance Coalition for Investor Value members:

  • American Bankers Association
  • American Fuel and Petrochemical Manufacturers American Insurance Association
  • Biotechnology Industry Organization
  • Independent Community Bankers of America National Association of Manufacturers
  • National Association of Real Estate Investment Trusts National Association of * Wholesaler-Distributors National Black Chamber of Commerce
  • Property Casualty Insurers Association of America Retail Industry Leaders Association
  • Securities Industry and Financial Markets Association
  • The Center On Executive Compensation
  • The U.S. Chamber of Commerce