The U.S. Securities and Exchange Commission (SEC) voted 3-2 yesterday to make it tougher for shareholders to push companies on issues such as climate change, social justice and diversity, with Democratic commissioners dissenting against the move, Reuters reported. The rule, first proposed by the SEC last November, raises the bar for submitting shareholder proposals to companies’ annual ballots and increases the proportion of the vote a proposal must win before it can be resubmitted. The SEC and corporate lobby groups have said the decades-old rules need to be modernized to stop niche issues clogging up corporate ballots — a risk that SEC chair Jay Clayton said on Wednesday could impose “significant” costs on companies and other shareholders. But the changes sparked blowback from many investors, lawmakers, and the SEC’s own Democratic commissioners, who warned it would kill proposals on climate change, racial justice, and the COVID-19 pandemic just as corporate America should be confronting these problems. “These issues are material to performance and shareholders…. Today’s rule amendments unnecessarily interfere with, and may chill, the live debate over these issues,” said Caroline Crenshaw, the agency’s new Democratic commissioner. Previously, an investor had to hold at least $2,000 of a company’s stock for one year to file a proposal — a threshold the SEC raised to three years on Wednesday. It also raised the proportion of the vote a proposal must win in order to be resubmitted to the ballot year-on-year.
