Each year, companies have an opportunity to consult America's securities regulator and convince the SEC that a given shareholder resolution can be excluded from the next AGM. These no-action requests, or Rule 14a-8 as it is formally known, have been used in the past to exclude climate resolutions.
For the 2025-2026 proxy season, the SEC will not be responding to or expressing any views on the vast majority of such requests. In effect, this means companies will not need a green light from the SEC to exclude climate resolutions from AGMs. In its statement, the SEC cited resource constraints and the government shutdown for this change.
Anders Schelde, CIO of Danish pension fund AkademikerPension has penned a letter to James Moloney - director of the SEC’s corporate finance division - in response to these changes.
“As long-term institutional investors with fiduciary obligations to our beneficiaries, we are concerned with recent developments in the Division of Corporation Finance at SEC”, Schelde wrote.
He went on to outline the pension fund’s position on no-action requests and frames these as “an essential mechanism for bringing financially relevant issues to the forefront”. Issues which the letter says, includes climate change.
Schelde urged the SEC to protect investor rights, which changes to Rule 14a-8 will end up eroding. His concern has to do with the financial materiality of climate risk and the new changes providing companies with the ability to ignore them.
If such risks are left unmanaged, the letter warned, they ultimately lead to financial losses for fiduciaries.
In addition to eroding investor rights in financially material mechanisms, the letter warns the SEC against the unpredictable nature of broader regulatory changes. “When regulatory direction becomes unpredictable, it introduces volatility that is ultimately borne by savers and pensioners”, Schelde wrote.
Similar concerns were also voiced by Mathias Narr, head of Engagement International at Swiss Ethos Foundation, a stewardship and engagement body representing major Swiss pension funds. In a social media post, he warned that the SEC's new approach was akin to "asking the cat to watch the goldfish."By allowing companies to sidestep votes on key issues such as board composition, supply chain risk, and climate change, regulators risk weakening the checks and balances meant to hold boards accountable" he warned.
