Letter to the SEC Addressing the Preservation of Shareholder Advocacy


SRI Investing is one of the signatories of the following letter, addressed on September 18 to the chairperson of the Securities and Exchange Commission. The letter seeks to preserve the right of relatively modest investors (most of us by this standard) to participate meaningfully in the shareowner advocacy process, one of the most influential aspects of SRI investing. I thought you might want to read it to get a slightly different glimpse of what your assets support:

September 18, 2019

The Honorable Jay Clayton


Securities and Exchange Commission

100 F Street, NE

Washington, DC 20001

The Honorable William Hinman

Director, Corporation Finance

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20001

Dear Chair Clayton and Mr. Hinman:

The 129 undersigned investors and investor organizations, representing $525 billion in assets under management, are writing to share their concerns about potential changes to Rule 14a-8. The Securities and Exchange Commission has placed investors on alert with its May 2019 announcement that it is considering conducting a rulemaking to alter the thresholds for filing and/or resubmission of shareholder proposals. Rule 14a-8 is a vitally important, cost-effective, market-based mechanism for shareholders of all sizes to communicate with management teams, directors and other shareholders on important corporate governance, risk and policy issues that affect companies and their investors. We oppose changes to Rule 14a-8 for the following reasons:

The current rule is not broken. While a handful of large trade associations are

advocating for the SEC to make changes to reduce investors’ ability to engage

constructively with companies, this process is one of the most reliable—and vital— ways

in which investors can practice responsible ownership. Additionally, it allows

shareholders to raise issues before they become crises that can erode shareholder


Investors in publicly traded companies have long held the right to participate in

the shareholder proposal process. In exchange for capital, shareholders gain unique

rights to bring concerns in front of corporate management. Changes to submission and

resubmission thresholds will likely decrease shareholders’ ability to share concerns

about and suggestions for better policies and procedures. Concerns may thus emerge in

other ways including voting against directors, lawsuits, books and records requests and

requests for additional regulations. The existing rule provides a well-established, well

understood, and reasonably predictable vehicle for investor input.

The rule is designed to give voice to all investors, including small investors. The

size of a shareholder’s investment in a company does not dictate the quality of the

shareholder’s idea. The threshold to file a shareholder proposal was intentionally set at a

level which allows small institutional and individual shareholders alike to engage

corporate boards and senior management. It has been pegged at a modest level for over

70 years. This harnesses the power of the free market to the benefit of companies,

investors and the economy. Efforts to revise ownership thresholds upwards would likely

exclude retail investors.

The existing resubmission thresholds are effective at screening out proposals

considered irrelevant or ill-advised by most shareholders. Advocates for weakening

shareholder rights argue that submission criteria and resubmission thresholds should be

revised upwards. It is our view that those advocates have not substantiated a clear and

widespread problem requiring the SEC to propagate a lengthy and costly rulemaking to

alter Rule 14a-8. This move seems particularly misguided when there are much more

pressing matters before the SEC, such as proxy plumbing and universal proxy.

Over the years, shareholder proposals have helped companies address issues before they have become significant problems. Proposals have contributed to significant and tangible benefits at companies. Issues addressed by shareholder proposals include:

• The now standard practice that independent directors constitute at least a majority of the board. This is now mandated in US stock exchanges’ listing standards;

• Advisory votes on executive compensation, or “say-on-pay” vote requirements – now mandated by the Dodd–Frank Wall Street Reform and Consumer Protection Act;

• Wide-scale adoption of international human rights principles as part of corporate codes of conduct and supply chain policies which help protect companies from legal and reputational risk;

• Expanded company initiatives to reduce greenhouse gas contributions to climate change and report about these efforts;

• Widespread adoption of corporate sustainability reporting;

• Adoption of comprehensive nondiscrimination policies that include sexual orientation and gender identity or expression which are now standard practice at the majority of large companies;

• Increased board diversity.

The SEC’s job is to protect investors and maintain well-functioning markets. Thus, we urge the SEC to protect the market mechanism tools available for shareholders to ensure that companies are transparent and accountable. It does not benefit the economy, companies or the capital markets to diminish this fundamental right.


Abacus Wealth Partners Santa Monica, CA

Addenda Capital Toronto, ON

Adrian Dominican Sisters Portfolio Advisory Board Adrian, MI

American Federation of Labor and Congress of Industrial Organizations Washington, DC

Arjuna Capital Manchester-by-the-Sea, MA

As You Sow Berkeley, CA

Azzad Asset Management Falls Church, VA

Bailard Foster City, CA

Bon Secours Mercy Health Cincinnati, OH

Boston Common Asset Management Boston, MA

Boston Trust Walden Boston , MA

Brethren Foundation Funds Elgin,IL

Calvert Research and Management Washington, DC

Catholic Health Initiatives Englewood, CO

Change Finance, PBC Longmont, CO

Church Investment Group Atlanta, GA

Church of the Brethren Benefit Trust Elgin, IL

Clean Yield Asset Management Norwich, VT

CNote Group, Inc. Oakland, CA

Communitas Financial Planning San Francisco, CA

Conference for Corporate Responsibility Indiana and Michigan Indiana and Michigan

Confluence Philanthropy Oakland, CA

Congregation of Sisters of St. Agnes Fond Du Lac, WI

Congregation of St. Joseph Wheeling, WV

Cornerstone Capital Group New York, NY

Corporate Governance (CorpGov.net) Elk Grove, CA

Corporate Responsibility Office - The Province of Saint Joseph of the Capuchin Order Detroit, MI

Dana Investment Advisors Waukesha, WI

Daughters of Charity, Province of St. Louise St. Louis, MO

Dignity Health Santa Cruz, CA

Domini Impact Investments LLC New York, NY

Dominican Sisters ~ Grand Rapids Grand Rapids, MI

Dominican Sisters of Peace Columbus, OH 4

 Dominican Sisters of Springfield IL Springfield, IL

Entelligent Boulder,CO

Everence and the Praxis Mutual Funds Goshen, IN

Figure 8 Investment Strategies Boise,ID

First Affirmative Financial Network Colorado Springs, CO

Franciscan Sisters of Mary Bridgeton, MO

Franciscan Sisters of Perpetual Adoration La Crosse, WI

Friends Fiduciary Corporation Philadelphia, PA

Fund for Democratic Communities Greensboro, NC

Green America Washington, DC

Green Century Capital Management Boston, MA

Hampshire College Amherst, MA

Harrington Investments, Inc. Napa, CA

IBEW Pension Benefit Fund Washington, DC

Impact Investors San Diego, CA

Impax Asset Management Greenwich, CT; London, UK

Incourage Community Foundation, Inc. Wisconsin Rapids, WI

Interfaith Center on Corporate Responsibility New York, NY

Investor Environmental Health Network Boston, MA

Investor Voice Seattle, WA

James McRitchie Elk Grove, CA

Jantz Management LLC Boston, MA

Jessie Smith Noyes Foundation New York, NY

Jesuit Committee on Investment Responsibility Washington, DC

JLens Investor Network New York, NY

John Chevedden Redondo Beach, CA

KBI Global Investors Dublin, Ireland

Kendall Sustainable Infrastructure Cambridge, MA

Laura Isanuk Denver, CO

Leadership Team of the Felician Sisters of North America Beaver Falls, PA

Manaaki Foundation Chicago, Illinois

Manhattan Country School New York, NY

Mary Reynolds Babcock Foundation Winston-Salem, NC 5

 Maryknoll Sisters Maryknoll, NY

Mennonite Education Agency Goshen, IN

Mercy Investment Services, Inc. St. Louis, MO

Miller/Howard Investments, Inc. Woodstock, NY

Missionary Oblates/OIP Trust Washington, DC

Natural Investments San Francisco, CA

Newground Social Investment Seattle, WA

NorthStar Asset Management, Inc. Boston, MA

Northwest Coalition for Responsible Investment Seattle, WA

Office of the Illinois State Treasurer Michael Frerichs Chicago, IL

Office of the Vermont State Treasurer Montpelier, Vermont

Oneida Nation - Trust Enrollment Department Green Bay, WI

Oxfam America Boston, MA

Parnassus Investments San Francisco, CA

Pax World Funds Portsmouth, NH

Portico Benefit Services Minneapolis, MN

Providence St. Joseph Health Renton, WA

Region VI Coalition for Responsible Investment Cleveland, OH

Rhode Island Treasurer's Office Providence, RI

Riverwater Partners Milwaukee, WI

Robasciotti & Philipson San Francisco, CA

Rose Foundation for Communities and the Environment Oakland, CA

Sant Charitable Foundation, Inc. Washington, DC

School Sisters of Notre Dame Cooperative Investment Fund Wilton, CT

School Sisters of St. Francis Milwaukee, WI

Seattle City Employees' Retirement System Seattle, WA

Segal Marco Advisors Chicago, IL

Seventh Generation Interfaith Inc Milwaukee, WI

SharePower Responsible Investing Westminster, MD

Shawn T. Wooden, Connecticut State Treasurer Hartford, CT

Sierra Club Foundation Oakland, CA

Sisters of Charity of Saint Elizabeth Convent Station, NJ 6

 Sisters of St. Dominic/Racine Dominicans Racine, WI

Sisters of St. Francis Charitable Trust, Dubuque Dubuque, IA

Sisters of St. Francis of Philadelphia Aston, PA

Sisters of St. Joseph of Boston Brighton, MA

Sisters of the Holy Family Fremont, CA

Sisters of the Humility of Mary Villa Marie, PA

Sisters of the Presentation of the BVMary of Aberdeen SD Aberdeen, SD

Sonen Capital San Francisco, CA

SRI Investing LLC New York, NY

Sustainable Insight Capital Management New York, NY

Swift Foundation Santa Barbara, CA

The CAPROCK Group Boise, ID

The Episcopal Church (DFMS) New York, NY

The Russell Family Foundation Gig Harbor, WA

The Summit Foundation Washington, DC

The Sustainability Group of Loring, Wolcott & Coolidge Boston, MA

Thomas P. DiNapoli, New York State Comptroller Albany, NY

Tides Foundation San Francisco, CA

Toniic Institute San Francisco, CA

Tri-State Coalition for Responsible Investment Montclair, NJ

Trinity Health Livonia, NY

Unitarian Universalist Association Boston, MA

US SIF: The Forum for Sustainable and Responsible Investment * Washington, DC

Utility Workers Union of America, AFL-CIO Washington, DC

ValueEdge Advisors Portland, ME

Veris Wealth Partners San Francisco, CA

Vermont Pension Investment Committee Montpelier, VT

Vert Asset Management Sausalito, CA

Wallace Global Fund Washington, DC

Wespath Benefits and Investments Glenview, IL

Zevin Asset Management Boston, MA 7


Cc: Commissioner Roisman Commissioner Peirce Commissioner Jackson Commissioner Lee

* This letter was organized by US SIF. Please contact Bryan McGannon, Director of Policy and Programs, with any questions at bmcgannon@ussif.org.