The tide has turned: SEC sides with investors and civil society on shareholder resolutions

Round up: the latest on global ESG-related resolutions

In a single day last week, the US Securities and Exchange Commission (SEC) made two rulings that many will see as genuine proof that climate change is becoming – as its head asserted recently – “front and centre” at the US regulator under Biden.

On Friday, the SEC batted away attempts by US oil & gas giants ConocoPhillips and Occidental to exclude shareholder resolutions calling for emissions reduction targets – a decision that could herald a major break with how the regulator has dealt with similar proposals in the recent past.

Under the Trump Administration, shareholders found it near impossible to get climate target proposals through the SEC’s ‘no action’ process, through which companies seek assurances from the regulator that it won’t take action if they exclude a proposal from the ballot at annual meetings.

This year, ConocoPhillips and Occidental both put forward tried and tested arguments used to evade such proposals at the SEC, but this time the outcome was different. 

Both asserted that the proposals, which called for reduction targets that include emissions linked to their products (Scope 3), related to ordinary business and, therefore, fell foul of the rule on micromanagement. In 2019, most proposals calling for Paris-aligned emission reduction targets were excluded on the basis of this rule. So many, in fact, that last year investors amended the wording of resolutions to ask for disclosure on Paris-alignment, rather than calling for targets. But still, filers were thwarted, as companies successfully argued they had already substantially implemented these less stringent proposals. 

This year, however, the SEC decided that the proposals were not attempts to micromanage oil majors, and that ConocoPhillips had not substantially implemented the requests already. 

Mark van Baal, Founder of Follow This, the Dutch activist behind the proposals at Occidental and ConocoPhillips, welcomed the decisions, describing them as a sign that the tide is turning at the regulator.

“Apparently, the sympathy with Big Oil in the Trump White House is now history”, he said. “Big Oil is no longer exempt from basic principles of shareholder democracy, as they were during the Trump era”.

Sanford Lewis, attorney at Strategic Counsel and a veteran observer of shareholder proposal battles, is more cautious, noting that the SEC said it did not regard the proposal at ConocoPhillips as micromanagement because it “only asks the company to set emission reduction targets; it does not impose a specific method for doing so”.

“If the proposal had asked the company to align those targets with the temperature goals of the Paris climate agreement, as previously excluded proposals have done, would it have been excludable as ‘imposing a specific method?” he asks. We won’t know, he says, until such a proposal is again filed.  

But, for filers of such resolutions, there are other reasons to be optimistic. A speech last week by SEC Acting-Chair Allison Herren Lee revealed the regulator was looking into the guidance used to assess ‘no-action’ requests. She said the work could “also involve reaffirming that proposals cannot be excluded if they concern socially significant issues, such as climate change, just because they may include components that could otherwise be viewed as ‘ordinary business’”.

The SEC also ruled against Union Pacific’s attempts to exclude a ‘Say on Climate’ resolution filed by Sir Chris Hohn’s hedge fund, The Children’s Investment Fund (TCI), which is behind a global campaign to make annual advisory votes on company climate plans a market norm. 

‘Say on Climate’ proposals have been withdrawn at Australian oil & gas giants Santos and Woodside, and at food conglomerate Nestlé and building materials giant LafargeHolcim in Switzerland this month, after the companies agreed to hold votes on their climate plans.  None have made an explicit commitment to give shareholders a vote every year, as sought by the Say on Climate campaign, though.

Blackrock votes against aerospace firm’s directors over climate and pay

Earlier this month, US SRI firms Mercy Investments and Boston Trust Walden withdrew a proposal at BlackRock over its poor record of supporting ESG proposals. The decision was prompted by signs that BlackRock is shifting to align its voting decisions with its lofty rhetoric on sustainability and climate. Just last week, at US aerospace firm TransDigm, BlackRock voted against the reelection of six directors over concerns around climate and pay. Last year, the investment giant voted against TransDigm’s Chair and then- CEO W.Nicholas Howley over the company’s “insufficient” oversight of climate risk as well as backing a proposal calling for the firm to set emissions targets. This year, it cranked up the pressure by voting against the re-election of four other directors and executive pay proposals.

Tackling systemic racism 

This proxy season will see a record number of proposals on racial injustice, according to As You Sow’s recent Proxy Preview report. One of these, which survived the SEC’s ‘no action’ process last week, calls on US retailer Home Depot to report on its role in tackling “systemic racism” – in particular by tightening policies around prison labour in its supply chain. The proposal was filed by SRI investor Northstar Asset Management, which has engaged and filed on the topic for several years, including at Home Depot last year. In another sign of how stark the change at the SEC seems to be, the regulator backed the exclusion of the 2020 resolution after judging it to be micromanaging, but let it through this year. 

This week, US-based manager CTW Investment Group urged fellow investors via an SEC filing to support its proposal at Bank of America, calling on the financial heavyweight to undertake and publish an independently verified “racial equity audit”. The resolution is one of eight filed at US financial giants by CTW and US labour union SEIU this proxy season. Last month, the SEC denied Citigroup’s attempts to block CTW’s proposal. The SEC has yet to rule on Amazon’s attempt to exclude a similar racial equity audit proposal filed by New York State Common Retirement Fund.


Lobbying proposals secured massive support from shareholders in recent proxy seasons and that trend looks set to continue as early votes draw significant backing. This month, requests for information on ‘indirect advocacy’ attracted 33% support at Walt Disney and around 37% at US health firm Maximus. The proposal at Walt Disney was filed by Mercy Investments and asked the entertainment firm to disclose how its lobbying aligns with its own stated public positions on issues like climate change.