New SEC Policies Empower Corporate Boards Over Investors, Impacting Climate and ESG Initiatives
Recent policy changes by the Securities and Exchange Commission (SEC) have shifted power from investors to corporate boards, potentially limiting investor-led reform efforts. Under acting SEC Chair Mark Uyeda, the agency has implemented measures that:
* Ease Blockage of Shareholder Resolutions: Companies can now more easily dismiss shareholder resolutions on sustainability, diversity, and other issues.
* Increase Filing Requirements for Passive Funds: Asset managers like BlackRock and Vanguard face stricter reporting requirements for their holdings.
* Restrict Investor Communication: The SEC has narrowed the scope of exempt solicitations, making it harder for small investors to communicate with shareholders on issues like director contests.
These changes align with the Trump administration's focus on deregulating corporations and emphasize investor return over environmental, social, and governance (ESG) considerations. Experts argue that the changes could limit activism on issues such as climate emission reduction and workforce diversity reporting.
The SEC's actions have drawn criticism from Democratic Commissioner Caroline Crenshaw, who believes they discourage investor engagement and harm capital formation. Meanwhile, business groups like the U.S. Chamber of Commerce support the changes, arguing they reduce special interest activism and prioritize investor returns.