January 27, 2022

Volume XII, Number 27

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January 27, 2022

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SEC Determines That Shareholder Climate Change Proposals Should Not Be Excluded

This week, the SEC issued a new staff legal bulletin concerning shareholder proposals, which stated, as a matter of SEC policy, that proposals "request[ing] companies adopt timeframes or targets to address climate change" are no longer considered excludable under Rule 14a-8.  (This rule enables corporations to exclude certain shareholder proposals from being considered, albeit after review by the SEC.)  This policy decision by the SEC means that companies will face a presumption that shareholder proposals concerning climate change will no longer be able to be excluded by management from consideration in a shareholder vote. 

Commissioners Peirce and Roisman, both Republican appointees, noted that this rule would likely have little practical effect, since "no climate change proposals were excluded [in 2021]" and "in 2020, only four climate change proposals were excluded based on micromanagement arguments."

Nonetheless, this SEC policy sends a strong signal that climate change issues are a proper focus for shareholder concern, and that corporate management should take these issues into account when running the affairs of a company. 

Today the Division of Corporation Finance issued a new staff legal bulletin relating to shareholder proposals, which rescinded the last three bulletins and indicated that the staff may no longer agree that certain proposals are excludable from proxy statements under Rule 14a-8.[1] Notably, the Bulletin singles out as likely no longer excludable proposals “squarely raising human capital management issues with a broad societal impact” and proposals that “request[] companies adopt timeframes or targets to address climate change.” While it is disappointing to see these two topics highlighted for special treatment, it is not altogether surprising given current SEC priorities.

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume XI, Number 309
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About this Author

Jacob Hupart Commercial Attorney Litigation Mintz Levin Cohn Ferris Glovsky and Popeo PC
Member

Jacob has a multifaceted litigation practice that encompasses complex commercial litigation, including cases involving securities, employment, and environmental claims, as well as class action litigation, white-collar criminal defense, and regulatory investigations. He has extensive experience handling all phases of litigation before federal and state courts, managing discovery, and conducting settlement negotiations. Jacob has represented clients in a variety of industries, including financial services, energy, education, and the media.

Prior to joining Mintz, he was an associate...

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