The Securities and Exchange Commission is attempting to bar many investors from pushing corporations to address major issues, including climate change, lobbying and election spending transparency, human rights abuses and discrimination. This would be a huge setback not just for those shareholders, but all of us who benefit from the progress they help to bring about.
The SEC wants to make it more difficult for concerned shareholders to file proxy resolutions initially and for reconsideration after a first year’s vote. The SEC proposal would increase the stock ownership threshold for shareholder proposals to $25,000 from $2,000 for shares held for a year, which flies in the face of the SEC’s claimed support for the “main street individual investor.”
The SEC rule change seeks to increase the percentage of support a shareholder resolution needs to be submitted for consideration, which is problematic for any new and cutting-edge issues. The proposal also would limit investors or their representatives to one shareholder resolution per shareholder meeting and require investors to be available for dialogue with corporate management even when they have hired financial professionals for their shareholder advocacy.
This may sound like “inside baseball” of concern only to active shareholders, but the truth is that the SEC proposal should scare every American because it undermines our notion of democracy. There is no democracy for shareholders in America unless they have a right to engage in meaningful shareholder advocacy and to be heard. Moreover, recent analysis by the Sustainable Investments Institute shows that if the SEC rule were to be implemented, the proposals that would be most restricted would be those addressing corporations’ political activity. The SEC rule thus threatens not only shareholder democracy, but our country’s democracy.
Thousands of comment letters opposing the rule change, including over 10,000 from Green America members, have flooded into the SEC. Investors object to the rule change because it would weaken the ability to hold corporations accountable, conflicts with the SEC’s mandate to protect investors and infringes on religious liberties.