SEC Suggests Scrapping Shareholder Climate Petition Rule

The U.S. Securities and Exchange Commission (SEC) is proposing to scrap a rule that allows shareholders to formally petition companies on climate action, sparking concern among investor groups.

According to the SEC, the move would provide states with legal clarity and motivation to implement their own shareholder proposal frameworks.

In reality, the change could block a longstanding avenue for pressuring public companies to factor in climate risks that could severely impact their operations. Investor advocacy groups warn that the rule changes will make it harder for shareholders to push companies on climate action.

For instance, investors have used this rule to persuade companies to be more transparent about their emission targets and environmental impacts. In 2022, nearly two-thirds of Home Depot shareholders backed a proposal on deforestation in its supply chains.