WASHINGTON – The Securities and Exchange Commission made it more difficult for companies to ignore climate change and human rights petitions.
The SEC intends to revoke certain policies previously adopted during the Trump administration. This adjustment makes it easier for environmentalists to file resolutions to companies while making it more difficult for them to ignore it.
Before this adjustment, companies could postpone shareholder climate proposals when asking for a timeline of their decision. However, the adjustment would still allow the exclusion of proposals if “the proposals afford discretion to management as to how to achieve such goals.”
Furthermore, the Securities and Exchange Commission intends to focus less on how human rights issues affect a company. Instead, the SEC will focus on the societal issues that exceed the ordinary course of business.
This adjustment would also validate certain proposals from the staff that the company usually ignores or excludes.
However, this adjustment also raises mixed emotions among different corporations. For Josh Zinner, the Interfaith Center on Corporate Responsibility chief executive officer, these changes could bring proxy voting battles in favor of shareholder resolutions.
More precisely, the companies would need to welcome more resolutions than before.
However, companies like BlackRock, State Street, and Vanguard expressed their support for the environmental and social impact of these changes. Instead of the Board of Directors choosing to vote on an issue, they may want to settle with the shareholder activists.
Contradictions to these changes also include companies fearing proposals submitted by gadflies and investors trying to micromanage the business.