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.