Ceres Applauds SEC Decision Allowing Financial Risks in Environmental and Social Resolutions
Ceres president Mindy Lubber praises the Securities and Exchange Commission for its decision yesterday to allow shareholder resolutions seeking information from companies on the financial risks they face from social and environmental issues including climate change.
The decision, outlined in SEC Staff Legal Bulletin No. 14E (CF) reverses an SEC rule that prevented investors from directly asking companies about the impacts of climate change and other pressing concerns on their financial bottom lines.
In the past, the SEC allowed companies to reject shareholder resolutions, (i.e., as a ”no action” request) if the resolution linked environmental or social issues to the company’s evaluation of risks.
“Investors will now be able to expressly inquire about the financial implications of critical issues such as climate change,” said Mindy Lubber, Ceres president and director of the $8 trillion Investor Network on Climate Risk. “No longer will they be forced to perform verbal gymnastics, re-writing resolutions, to obtain the information they need to exercise their fiduciary duties.”
Climate change presents far-reaching physical, regulatory and litigation risks to businesses in numerous industry sectors as well as significant opportunities for investment in alternative energy technologies and products.
The decision reflects the SEC’s new orientation under Mary Schapiro’s leadership towards protecting investors.
“The guidance strikes the right balance of ensuring that resolutions about critical matters reach company shareowners, without opening the floodgates to proposals of more questionable significance,” added Lubber.
The decision is an important victory for shareholders who have filed hundreds of resolutions with U.S. companies in recent years seeking information on companies’ responses to climate change.
Investors managing trillions of dollars in assets have been petitioning the SEC since 2004 for interpretive guidance on corporate disclosure of climate risks and opportunities, and to ensure that shareholder have the right to vote on resolutions seeking disclosure of climate risks. In June 2009 investors asked the SEC to improve its handling of resolutions related to environmental, social and governance (ESG) issues including climate risk.
About Ceres and INCR
Ceres is a leading coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as climate change. Ceres directs the Investor Network on Climate Risk, a network of 80 institutional investors with collective assets totaling $8 trillion focused on the business impacts from climate change. For more information, visit www.ceres.org or www.incr.com