In her remarks today before the Center for American Progress: “A Climate for Change: Meeting Investor Demand for Climate and ESG Information at the SEC,” SEC Acting Chair Allison Lee reiterated her views on the importance of ESG disclosure generally (including human capital, human rights, board diversity, and political spending), and climate disclosure specifically, and the purported shortcomings of the current disclosure scheme, signaling the SEC’s forthcoming focus on developing or facilitating a comprehensive ESG disclosure framework aimed at eliciting consistent, comparable, and reliable data for investors, as well its intent to explore other areas of potential regulation, including auditor attestation of voluntary sustainability reporting and enhanced PCAOB standards or guidance for auditors’ review of companies’ ESG-related financial statement disclosures.
In addition to mandatory climate and ESG disclosure, Lee also indicated changes to the Rule 14a-8 no-action process and Rule 14a-8, as reflected in this key excerpt:
Improvements to the Shareholder Proposal Process. The SEC plays a critical role in the shareholder proposal process, with staff in our Corporation Finance Division drawing upon their deep expertise and experience to provide much needed certainty regarding when shareholder proposals may or may not be excluded from the ballot.
Because of the vitally important nature of this function, I have asked the staff to develop proposals for revising Commission or staff guidance on the no-action process, and potentially revising Rule 14a-8 itself. The goal is to bring greater clarity to the no-action relief process, increase the number of proposals on the ballot that are well-designed for shareholder deliberation and votes, and reduce the number that are not. This could involve reversing last year’s mistaken decision to bar proponents from working together and restricting their ability to act through experienced agents. It could also involve reaffirming that proposals cannot be excluded if they concern socially significant issues, such as climate change, just because they may include components that could otherwise be viewed as “ordinary business.”
Also purportedly slated to be revisited are the SEC’s August 2019 “Guidance Regarding Proxy Voting Responsibilities of Investment Advisers” (we reported on here), fund proxy voting disclosure, and the universal proxy rule comment file.
See our companion post today: "SEC Seeks Public Comment on Climate Change Disclosure"; related reports in last week’s Alert: “SEC Chair Nominee: Senate Banking Nomination Hearing,” “SEC Launches Climate Disclosure Review, Enforcement Task Force,“ “SEC Examination Priorities Include Climate & ESG Risks,” “SEC Investor Bulletin: ESG Funds”; and these prior reports: “On Deck: Climate Risk Disclosure,” and “Allison Lee Designated SEC Acting Chair.”