Shareholders say if passed, the bill would severely weaken corporate accountability structures and critical financial regulation meant to safeguard the public and the economy.
NEW YORK, NY, TUESDAY, JULY 11, 2017 – The Interfaith Center on Corporate Responsibility (ICCR), a coalition of institutional investors that engage corporations on the environmental and social impacts of their operations, today sent a letter to all U.S. Senators urging them not to pass the Financial CHOICE Act.
The proposed legislation which passed the House and is currently pending in the Senate, would not only eviscerate critical financial reforms instituted in response to the 2008 financial crash, but would also eliminate the long-standing right of shareholders to exercise their voice regarding the governance of the companies they own.
“The CHOICE Act is dangerous on multiple levels and it is crucial that the Senate reject it,” said Josh Zinner, ICCR’s CEO. “From the perspective of financial reform, this bill would roll back Dodd Frank rules that are creating a fairer and more transparent financial services marketplace and reducing the excessive risk-taking by banks that was responsible for the 2008 meltdown. From the perspective of shareholder democracy, the CHOICE Act is a brazen attempt to eliminate shareholders’ ability to file proxy resolutions – a highly effective corporate accountability tool that has been beneficial to companies and has produced meaningful change on important environmental, social and governance issues.”
The letter was signed by 166 institutional investor members of ICCR that engage in dialogue with the corporate management of the companies that they hold shares in to improve corporate performance on issues impacting communities around the world, including climate change, corporate water stewardship, human rights and health care.
Shareholder resolutions are currently used to heighten awareness of an issue with board and management, as well as with other shareholders who can vote on them at annual meetings. While purely advisory in nature, when these resolutions achieve significant support they often lead to positive changes in corporate practices that benefit all stakeholders and improve the company’s bottom line. The letter cites examples where shareholder resolutions have resulted in meaningful corporate commitments and improved environmental and social performance.
The CHOICE Act proposes drastic changes to the proxy process, including setting the ownership thresholds so high that it would eliminate virtually all shareholder proposals. This would effectively silence investors’ ability to raise environmental, social, and governance concerns with the board, management and other shareholders.
ICCR members believe the CHOICE Act would be bad for companies, their investors, the broader economy and society at large, and will continue to advocate against its passage by the Senate.