As You Sow’s Fugere: ‘SEC’s rule change is a violation of due process’
US shareholder resolutions on climate have dropped by over a third this year, with mid-season changes to SEC rules making it harder to hold firms accountable, warns Danielle Fugere of As You Sow
Investors in US companies are becoming increasingly reluctant to file climate-related resolutions, amid a more challenging regulatory environment, according to Danielle Fugere, president and chief counsel of shareholder advocacy group As You Sow.
Speaking on the Net Zero Investor podcast, she highlighted several key concerns.
“ESG resolutions are down approximately 34% this year. We attribute that to a convergence of factors. First, there is certainly a ‘wait and see’ attitude regarding changes in the administration and what that will mean for shareholder proposals.
“Second, investors have faced the threat of legal action over the past couple of years from the judiciary committee and red state attorneys general related to ESG issues. Many asset managers and owners have been reporting to Congress and clarifying the rules with legal counsel.”
“While filing proposals is not against the law, there definitely has to be a process to establish that. We believe we are now at the tail end of that,” Fugere said.
As of early April, only 84 climate resolutions had been filed, according to As You Sow’s latest Proxy Voting Preview. Nonetheless, climate change once again emerged as the issue attracting the most attention, with transition planning becoming a key priority for investors, the group noted.
A major challenge for investors, Fugere explained, has been uncertainty around the regulatory framework.
In February, the SEC revised regulations 13D and 13G, in a move that rendered many investors ineligible to report beneficial ownership using the simplified “short-form” Schedule 13G. In practical terms, this made it significantly more burdensome for investors to meet the reporting requirements associated with filing resolutions.
Speaking on the podcast, Fugere criticised the timing of this change. “The SEC has changed the rules mid-season, after proposals had already been filed. They reverted to rules from the first Trump administration and gave companies an opportunity to file late ‘no action’ requests. That was troubling and a violation of due process,” she said.
Fugere also indicated that the campaign group’s priorities were evolving. “We have to assess the value of trying to engage with a company like Exxon. What we are now looking at is companies that use oil and gas—such as those involved with AI. This is the other side of the utility engagement story: ensuring that the demand for AI, and its electricity use, is directed towards renewables.”
“Yes, we are being judicious and are carefully assessing where we can achieve more movement on these important issues.”
Click here to listen to the full conversation on the NZI podcast.
