The Securities and Exchange Commission has taken steps to make it easier for shareholders to seek action on some social issues affecting companies.
The agency announced yesterday that it rescinded three bulletins released over the past four years that made it more difficult for shareholders to file some resolutions seeking changes in businesses’ policies. The regulations are known as Bulletins 14 I, J and K.
The bulletins limited the social and management issues that could be addressed through shareholder resolutions during proxy season. The new action eliminated prohibitions against shareholders filing some social and environmental resolutions and allows more resolutions dealing with social, human capital and management issues to proceed to a shareholder vote.
For instance, the SEC clarified that proposals that raise significant social policy issues, and do not micromanage companies, will be allowed to move forward. Previously, any resolution that had specific timelines in it was excluded.
Another change said proposals that ask companies to set greenhouse gas emissions targets aligned with global goals or frameworks, without imposing specific criteria for how to do so, are allowed.
Also, proposals that raise broad social or ethical concerns related to a company's business practices now may not be routinely excluded.
As You Sow, a nonprofit organization that promotes environmental and social corporate responsibility, praised the changes.
“This guidance, which underscores the [right of] shareholders to raise and vote on important issues, is timely and necessary,” Danielle Fugere, president of As You Sow, said in a statement.
“At this time of global upheaval, the stakes couldn’t be higher. The shareholder voice plays a critical role in ensuring companies are addressing issues that create risk and opportunity and can affect shareholder value, including greenhouse gas emissions, social justice, and diversifying workplaces and boardrooms, reducing the harmful impact of social forums like Facebook, and reducing plastic waste,” she said.
Sanford Lewis, an attorney who works with the Investor Environmental Health Network and other environmental organizations, added in a statement, “The SEC’s new guidance essentially resets some of its standards to the fair and functioning process that existed prior to changes by the last administration. Those prior changes significantly undercut shareholder rights.”