SEC issues rulings on lobbying and energy finance proposals by Minerva-Manifest.

The landscape of shareholder engagement has once again shifted with recent decisions made by the Securities and Exchange Commission (SEC). The SEC has approved significant rulings that impact shareholder activism and corporate disclosure requirements.

Five major companies, including Goldman Sachs, Morgan Stanley, ExxonMobil, United Airlines Holdings, and McDonald’s, have been allowed to exclude shareholder proposals related to lobbying activities from their agendas. These proposals aimed to request annual reports providing transparency on lobbying payments, outlining policies governing lobbying activities, and detailing management and board decision-making processes. The SEC’s issuance of Staff Legal Bulletin No. 14M (SLB 14M) on February 12, 2025, played a key role in supporting the exclusion of these proposals from the agendas. The guidance offers companies more flexibility in excluding specific proposals, particularly those related to environmental and social issues.

This move marks a departure from past SEC stances, where similar no-action requests were often rejected. Shareholders may express concern as these decisions suggest that proposals in the past could now be excluded under this new guidance, impacting the shareholder activism landscape. However, the recent approval of energy finance proposals proposed by NYC Comptroller Brad Lander at major banks is a step towards promoting transparency in sustainable finance. These proposals require banks like Wells Fargo and Bank of America to disclose their energy supply ratios (ESR) annually, shedding light on their support for low-carbon and zero-carbon energy initiatives contrasted with their financing of high-carbon and fossil fuel energy products.

These decisions reflect the evolving nature of shareholder engagement, with the SEC’s focus appearing to favor corporate interests over shareholder activism. This shift aligns with the regulatory agenda of the re-elected Trump administration, emphasizing the reduction of regulatory burdens on businesses. On the other hand, the SEC’s approval of the energy finance proposals showcases a push for transparency in sustainable finance, benefitting shareholders.

As the SEC’s decisions continue to influence future Annual General Meetings (AGMs) and corporate disclosure requirements, the complex landscape of shareholder engagement and the impact of these regulatory changes will become more evident. Shareholders and companies alike will need to adapt to these evolving dynamics in the shareholder engagement environment.

In conclusion, the recent SEC rulings highlight the balancing act between corporate interests and shareholder activism, ultimately shaping the future of shareholder engagement and corporate governance. These decisions emphasize the importance of transparency in sustainable finance and the need for companies to navigate the intricate landscape of stewardship with informed decisions aligned with sustainable principles.