The right of shareholders to propose resolutions aimed at changing corporate policy is being threatened by a bill now making its way through Congress, says Chris Meyer, manager of advocacy and research for Praxis Mutual funds.

Under the Financial CHOICE Act, only the largest shareholders would be able to file shareholder resolutions, shutting out many organizations and funds, such as Praxis, a family of mutual funds that takes faith and environmental, social and governance (ESG) issues into consideration.

Proponents of the law, which would roll back provisions of the Dodd-Frank financial industry reform act that was passed after the 2008 financial crisis, argue the changes are needed to make American business more competitive.

Currently, shareholders holding $2,000 or 1 percent of shares in public companies can file shareholder resolutions. The result is that people or organizations with only a small stake in a company can file resolutions that cost the corporation “tens of millions of dollars and countless hours of time, which diverts resources focused on creating long-term value for their shareholders,“ the Business Roundtable says.

The Financial CHOICE Act, approved by the House of Representatives in June, would require those filing resolutions to have at least 1 percent of company stock, eliminating the $2,000 provision.

“This would effectively prohibit all but the largest institutional shareholders from trying to influence corporate policy,” says Meyer. “Even if we join other organizations to file a resolution, we do not come close the reaching the 1 percent threshold.”

Meyer says Praxis and other organizations have successfully filed resolutions prompting corporations to take ESG issues into consideration and to be more transparent in reporting what they are doing.

Resolutions are nonbinding but “if a company sees shareholders are concerned about an issue, it will usually respond,” he says. “Five or six years ago about 20 percent of the S&P 500 corporations published sustainability reports—now more than 80 percent do. A lot of this has come about because of shareholder resolutions.”

“Shareholders will be silenced if this bill goes through,” he says. “Shareholder resolutions are a tool for us. Without the ability to file them, our concerns would not reach the upper echelons of corporations.”