In 1942, the U.S. Securities and Exchange Commission (SEC) promulgated its first rule regulating shareholder proposals – Rule 14a8. For more than seven decades, the shareholder proposal process it outlines has allowed both large and small shareholders to alert corporate boards and the investor community to their concerns and to request timely action on emerging, or neglected, issues.
Shareholder proposals and proxy voting are two key elements of shareholder democracy – and together, serve as cost-effective mechanisms for shareholders to monitor and hold corporate management accountable, to communicate collective shareholder views to the board, and to create and protect long-term value. However, over the last 18 months, there has been a marked increase in proposed state legislation that would prohibit state and municipal pension funds from implementing ESG investing strategies or utilizing asset managers that do so. Numerous “anti-ESG” bills have been introduced in 37 states and a number of these bills have been passed into law, including a law in Texas mandating that state pension funds cut ties with investment firms seen to be “boycotting” fossil fuel companies by addressing climate risk in their portfolios. Yet, if implemented, these “anti-ESG” bills could cause considerable financial damage to state pension funds and their beneficiaries.
Through a combination of legal action, letters to Congress, and joint statements, ICCR and its allies As You Sow, Jim McRitchie, The Investor Rights Forum, CERES, the Council of Institutional Investors, US SIF, and PRI are pushing back against the restrictions to shareholders’ rights and access to the corporate proxy.
Get Started with these Shareholder Rights Resources
Read these resources related to the preservation of rule 14a-8 and shareholder democracy.
The undersigned investors, fiduciaries, and organizations are writing in support of the pending rulemaking entitled Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals Under Exchange Act Rule 14a-8. While the formal comment period has ended, we want to add to the public docket some important information that emerged after the comment period closed. Our experiences […]
A 2023 legislative report from Pleiades Strategy