Firms bet on SEC shift as requests to ban ESG proposals surge

Regulator’s revival of Trump-era guidance is already prompting withdrawals on climate targets

US firms are betting on a sympathetic US regulator when it comes to banning shareholders’ ESG proposals this AGM season. 

Companies have already made more than 300 submissions to the Securities and Exchange Commission (SEC) asking permission to block resolutions from going to vote at their next annual meetings, according to data from proxy solicitation firm Georgeson. 

This compares with 265 during last year’s entire proxy season. 

Firms can have proposals struck off the ballot using a mechanism called the ‘no action’ process, the rules of which have become a political football under recent White House administrations.

Last month, REP reported on the SEC’s plans to revive guidance designed to make it harder to file ESG-related resolutions, published during President Trump’s first term but revoked under Biden. 

During the 2023 proxy season, when Biden was in office and it was easier to file resolutions, companies made just 167 requests to ban them from going to vote. 

This contributed to a boom in environmental and social asks from investors and civil society. 

Since then, however, the number of ‘no action’ requests has started to climb, with a jump of more than 50% last year. 

This year, the SEC is allowing companies to make requests after the official deadline, to account for the fact it changed its guidance part way through the proxy season.  

The change of tone is already having an impact, with some shareholders withdrawing proposals to avoid them being barred by the SEC process.

Trillium Asset Management, for example, pulled its request for medical testing company Quest Diagnostics to set climate targets, after the firm told the SEC the proposal was tantamount to micromanagement.  

Similar proposals garnered the support of nearly half Quest’s shareholders in 2023 and 2024.  

Trillium’s director of shareholder advocacy, Andrea Ranger, believes the company filed its ‘no action’ application on the assumption the SEC would become more sympathetic to corporates under Trump.  

Given the political shift, she told REP it would have been “risky not to withdraw” the proposal, adding that Trillium didn’t want it to become the “first test case” on calls for science-based targets under the SEC’s new guidance.