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Asset managers and investors who join groups need to make sure they’re complying with SEC rules on shareholder engagement, the regulator said. — Bloomberg
WASHINGTON: The US Securities and Exchange Commission (SEC) has warned asset managers and activist investors about their reporting obligations following a shareholder campaign in 2021 to remove Exxon Mobil Corp directors over their record on climate.
The SEC’s guidance stems from an investigation into the contentious activist investor push that year that successfully changed the oil company’s board of directors.
The agency said it probed but chose not to to pursue an enforcement action against members of a group called Climate Action 100+, adding it had “serious concerns” about the conduct of the group and other participants.
Asset managers and investors who join groups need to make sure they’re complying with SEC rules on shareholder engagement, the regulator said in a report.
The agency said shareholders have the right to express their views but anyone owning more than 5% of a public company must disclose their plans and other information if they seek to change or influence control of the company.
The SEC also said it probed whether the climate group and its members pressured BlackRock Inc and State Street Corp – two major investors in Exxon – to support group-backed matters submitted to a shareholder vote.
The investigation didn’t conclude that BlackRock or State Street agreed to vote proxies in certain manners or shared their proxy voting intentions with those associated with the group.
Climate Action 100+, which is supported by the Boston-based nonprofit group Ceres, said it has always operated within US securities law and supports investors as they assess the climate risks of companies they choose to invest in.
“Engaging with companies on how they manage those risks and assessing director performance is a long-standing, lawful part of responsible investing.
“To be clear, the SEC report did not find that Climate Action 100+, Ceres, or any investor violated the law,” said Michael Boudett, general counsel of Ceres, in a statement.
BlackRock, State Street and Vanguard declined to comment. Exxon didn’t immediately respond to a request for comment.
The Republican-led House Judiciary Committee in December 2024 also released an interim report about the group of investors, calling it “a cartel” of financial firms and climate activists.
The committee report said it had uncovered “substantial evidence of collusion and anti-competitive behaviour” by the financial industry to “impose radical environmental, social and governance-goals” on US companies.
A spokesperson for Climate Action 100+ said at the time that the committee’s claims were “completely false” and that the group “doesn’t control how shareholders vote, nor has it ever done so”.
The SEC’s report follows a broader shift in how the agency approaches shareholder votes and climate policy in general.
SEC Chairman Paul Atkins has long criticised shareholders who he says weaponise the proxy votes to push agendas on climate or social equity measures and President Donald Trump signed last year an executive order to limit the influence of proxy advisory firms.
The SEC issued its warning and guidance ahead of the 2027 proxy season via a seldom used tool known as a “report of investigation”. — Bloomberg
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