Katie DeLuca Discusses Reactions to SEC Policy Shift on Climate, Social Concerns

April 19, 2022

An April 4, 2022, Bloomberg Law article quoted McGuireWoods partner Katie DeLuca about shareholders’ and companies’ reactions to the U.S. Securities and Exchange Commission’s decision to weigh environmental, social and governance (ESG) considerations when evaluating requests to exclude proxy proposals companies perceive as micromanaging or intruding on ordinary business operations.

After the SEC made that policy shift, investors became more aggressive in submitting ESG-supporting proxy proposals, the article said. The author cited one example DeLuca offered, that activists were pressuring banks with proposals on how their lending and underwriting practices may contribute to fossil fuel development.

As the SEC began quashing more requests by companies to exclude shareholder proposals related to climate and social issues from their proxies, companies began making fewer such requests, the article said.

DeLuca noted that companies are also changing tactics by focusing on whether proposals are so specific they limit management discretion on how to accomplish the goals proponents seek. She added, however, that it was hard to tell where SEC drew the line since, to date, it has issued few determinations based on “micromanagement” arguments.

A member of McGuireWoods’ securities and capital markets practice, DeLuca is a leader of the firm’s ESG team of lawyers and policy advisers dedicated to helping clients identify, analyze and integrate ESG concerns and priorities across their operations.

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