Nuns berate SEC over planned shareholder rules

Date published: 01 December 2019

Attracta Mooney


Two groups of nuns, including one that puts living a life of peacemaking at the centre of its work, are gearing up for a fight with the US financial regulator over proposed shareholder rules.

The Ursuline Convent of the Sacred Heart in Toledo and the Dominican Sisters of Peace based in Columbus, Ohio, want the Securities and Exchange Commission to reverse its plans to introduce rules that would make it harder for smaller shareholders to submit proposals at annual meetings of public businesses in the US.

In a letter addressed to SEC chair Jay Clayton, Sister Barbara Kane, justice promoter at the Dominican Sisters of Peace, which has about $300m in assets, said: “Changing the rules governing shareholder resolutions is a solution without a problem.”

She added: “I understand that the SEC must balance the needs of shareholders with those of businesses but these changes are putting the scale on the side of business which puts our investments in danger.”

A divided SEC voted along political lines in November to require investors to hold more shares for longer before they can submit proposals. Currently shareholders must hold $2,000 worth of shares for a year, but the SEC plans to change this to a $25,000 holding for at least a year, declining to $2,000 for three-year holdings. It also wants to raise the thresholds for resubmitting unsuccessful proposals.

We strongly urge the SEC to reconsider the proposed rule changes

Sister Sandra Sherman, Ursuline Convent of the Sacred Heart

Sister Sandra Sherman, president of Ursuline Convent of the Sacred Heart in Toledo, which has an investment pot of about $20.6m, warned in a letter to the SEC that the proposed rule changes could leave congregations such as hers “without a voice” at corporate meetings.

She said the $2,000 ownership threshold enabled a variety of investors to have their voices heard. “These smaller investors have had great impacts on corporate practice throughout the history of the proposal process.”

She pointed out that small shareholders through their proposals have been instrumental in encouraging many companies to consider climate change, human rights assessments and governance reforms. “The proposed changes could prevent significant topics from even being suggested and considered, a loss to all shareholders,” said Sr Sherman. “We strongly urge the SEC to reconsider the proposed rule changes.”

According to data from the Interfaith Center on Corporate Responsibility, a coalition of investors with $400bn in assets, more than a third of ICCR members’ 277 proposals during the 2019 annual meeting season resulted in changes to corporate policies and practices.

The figures also show that of the 114 shareholder proposals that went to a vote this year, 10 achieved majority backing, while more than 60 per cent received at least 25 per cent support.

Sr Sherman said shareholders engaged on environmental, social and governance risks “precisely because we are concerned about the long-term health of the companies in which we are invested”.

“Engagement enables them to mitigate reputational, legal and financial risks, and build value. The filing of shareholders resolutions by investors big and small is a crucial part of the engagement process,” she said.

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