PRI warns CEO

The chief of UN-backed Principles for Responsible Investment (PRI) has lashed out at the SEC and corporate lobby groups for trying to dampen investor rights.

In an opinion piece for the FT this week, chief executive of the PRI Fiona Reynolds strongly criticised what she called “powerful countervailing forces” that were attempting to silence shareholders on matters such as climate change by pressuring corporate regulators to undermine long-standing shareholder rights.

“These come in the guise of corporate lobby groups,” she warned. “In the US, they seek to win the day on climate action with well-funded tactics of delay, obfuscation and denial.

“Nowhere is this more apparent than in the recent SEC proposals which represent a substantial setback for responsible investment,” Reynolds added.

Reynolds’ forceful attack follows the SEC’s proposals to drastically change its proxy adviser and shareholder proposal voting rules.

Under the proposals, the SEC will increase the number of years a shareholder must hold a company’s stock before they are eligible to submit a shareholder proposal.

For the first time since 1954, the regulator is also pushing to increase the levels of shareholder support that a proposal must receive to be eligible for resubmission.

In addition, the SEC wants to make it more difficult for proxy advisers to aid shareholders in their rightful quest to hold company boards to account.

The regulator’s plethora of restrictive proposals include making proxy advisory firms supply companies with advance copies of their advice before it goes to investors.

Companies would be able to review these documents so they can “identify errors in the proxy voting advice,” it has dubiously claimed.

Reynolds is adamant these SEC proposals, if adopted, will have significant international impacts.

“The proposed rules stand in direct contradiction of the SEC’s stated purpose, to protect investors. They are in effect a form of corporate voter suppression to disenfranchise investors who seek to actively engage with companies on ESG matters, climate risks, sustainability and long-term value creation,” Reynolds stated.

The PRI chief also stated it was “no coincidence” that some of the business groups named by UK NGO Influence Map as the most active in negative climate lobbying are also among the loudest voices urging the SEC to diminish shareholder rights – including the likes of oil titans ExxonMobil and Chevron.

Last month, it was revealed that an advocacy group linked to the National Association of Manufacturers (NAM), whose members include ExxonMobil and Chevron, had sent a number of fake investor letters to the SEC purporting to be in favour of the regulator’s proxy voting changes.

The SEC’s head honcho Jay Clayton was left red-faced after he cited around seven of these dubious letters at a commission meeting in Washington.

According to Clayton, the letters were written by ‘ordinary’ investors who were thoroughly enthused by the SEC’s proposals to overhaul its proxy adviser rules.

However, a Bloomberg investigation discovered the letters were actually penned by advocacy group the 60 Plus Association – which is a member of NAM-founded investor group the Main Street Investors Coalition.

As the SEC awaits public feedback about its proposals, Reynolds urged investors to speak up against the SEC’s destructive plans.

“Shareholder engagement and voting has been critical in improving corporate governance and elevating ESG issues up the agenda in US companies.

“I encourage investors in the coming weeks to stand together, weigh in with the Commission and demand that it puts aside these irresponsible and retrograde proposals,” she said.

Last Updated: 10 December 2019
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