Presbyterians Urged to Oppose SEC Proposal to End Shareholder Resolution Rule

Presbyterians are being asked to write to the U.S. Securities and Exchange Commission in opposition to its proposed elimination of a rule that ensures adequate corporate disclosure. According to an Action Alert issued this week by the Office of Public Witness of the Presbyterian Church (U.S.A.), eliminating the rule would impede faith-based investors such as the PC(USA) from exercising religious freedom.

The denomination says that for decades it has used its voice as a shareholder, through its Office of Faith-Based Investing and Shareholding Engagement, to advocate for the justice policies of the church. A key part of that work is filing shareholder resolutions asking companies to disclose information, to measure and report on the potential impacts of their operations, or to adopt or change policies and practices to address those impacts. The PC(USA) states that such resolutions have prompted dialogues and actions that can bring a company’s activities into closer alignment with the denomination’s justice values while improving company performance, and that in the last 16 years the church has filed more than 50 shareholder resolutions.

The SEC has proposed rescinding Rule 14a-8, which governs the shareholder resolution process. The source notes that the rule was created in 1942 to establish a uniform system for ensuring adequate corporate disclosure. The PC(USA) argues that repealing it would prevent shareholders from getting the information they need and would prevent faith-based investors from exercising religious freedom through the shareholder process. It also states that shareholder resolutions have helped expose financial risks, strengthen corporate governance and protect long-term values, and that removing this tool would give corporate executives more power.

The denomination describes church investment as more than a practical question. Quoting the United Presbyterian Church in the U.S.A.’s 183rd General Assembly (1971), it calls investment “an instrument of mission and includes theological, social and economic considerations.” It also cites a 1985 statement by the 197th General Assembly on “the importance of the church’s stewardship of its resources, including the management of its investments in a manner consonant with its commitment to justice.” The PC(USA) contends that rescinding Rule 14a-8 would make this stewardship much more difficult.

The SEC is accepting public comments on its proposal through Nov. 20, and the article links to an SEC Comment Form. The denomination has also provided a sample letter template with guidance on submitting a more detailed comment, along with access to the proposed rule. The sample text includes the statement that shareholders “are owners, and owners deserve a voice in the companies they invest in,” and says that investing in ways guided by faith is “key to our success and long-term value.” The PC(USA) states that it has been using its voice as a shareholder for more than 55 years and has engaged hundreds of companies on issues affecting their long-term financial value, often leading to constructive discussions prompted by a shareholder resolution (Micah 6:8).

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