Circle The Wagons! Shareholder Activists Fear SEC Intentions on Proxy Rules

This has been a productive spring proxy season for shareholder activists who've won significant concessions from companies on environmental, social and governance (ESG) issues like global warming and disclosure of corporate political donations.

But there's growing concern about the early smoke signals from a series of hearings by the Securities and Exchange Commission that could make it more difficult - if not impossible - to use the proxy process to promote ESG reform in the future.

Meg Voorhes of the ISS Social Issues Service says: “I was astounded by reports from the meeting that it included a discussion of the possibility of revising the shareholder rule to omit most social and environmental proposals. It's as if the last 30 years--even the last 10 years--of shareholder activism, the anti-sweatshop campaign, climate regulation, the Freshfields report, the Principles for Responsible Investment, etc. hadn't happened.”

The first hearing, which took place on Monday, this week, had this agenda:

· The federal role in upholding shareholders' state law rights

· The purpose and effect of the federal proxy rules

· Non-binding proposals under the proxy rules

· Binding proposals under the proxy rules

Lauren Compere of Boston Common Asset Management: “The direction the SEC is taking on social and environmental resolutions is truly scary! We all need to take up this issue and make sure the SEC hears loud and clear from the social investment community that this will not be tolerated.”

Peter Kinder, President of KLD Research and Analytics, a leading investment research company on social and environment issues: “Now is the time to rally round the leaders in this effort.”

A small group of activist institutional investors including Boston Common, Domini, Calvert, Trillium and others are said to be working with Sanford Lewis and the Investor Environmental Health Network on expanding the definition of risk assessment and ordinary business that the SEC staff has taken vis a vis social and environmental resolutions over the past five years.

You can find out more about the hearings from the SEC.

(Internal note: How can one change font types and colors in the Drupal rich text editor? I wrote this in Word, then cut and paste, because I was selecting text from various sources that had various fonts and colors. Or is it simply advisable to use Word, and then cut and paste?)