Managers of the Church of England’s £8.3bn investment portfolio have criticised US regulators for planning to deny smaller shareholders, such as the church, the right to challenge US companies over excessive executive pay and the climate crisis.
A group of 70 church investors, including the C of E, have written to the US Securities and Exchange Commission (SEC) opposing its plans to “modernise” shareholder rules by adding stricter criteria for filing resolutions voted on at a company’s annual meeting.
The Church Investors Group (CIG), which manages a combined £21bn in assets, said the changes would make it harder for independent shareholders to push for better governance.
Edward Mason, the head of responsible investment for the Church Commissioners, which is the C of E’s financial arm, told the Guardian: “We’re very concerned about the direction of regulation in the US that is restricting shareholders’ ability to hold companies to account. The mission of the SEC is to protect investors but these changes seem intended to protect companies from accountability to their investors.”
The C of E said if the rules were changed it would be harder to challenge US companies on issues such as high executive pay, climate change and diversity. Some of its largest corporate holdings are in US companies including Google’s parent Alphabet, the tech firm Oracle and the agriculture equipment firm John Deere.
The C of E has previously attacked large US firms such as Amazon for paying “almost nothing” in taxes and criticised ExxonMobil for failing to disclose emissions reduction targets.
In the UK, the church has used its shareholding to criticise Sports Direct over poor working conditions and attack energy companies such as BP over their carbon footprints. It is pushing Barclays to phase out loans for fossil fuel companies.
Its power to formally call for shareholder votes in the US will be at risk under the SEC’s proposed rule changes. US rules stipulate that any shareholder owning $2,000 (£1,544) worth of shares or a 1% stake for at least one year can submit a resolution to be voted on at a company’s AGM. However, the changes would create a tiered system where small shareholders with at least $2,000 worth of shares would have to wait three years to put forward a shareholder vote. This is three times as long as large investors who own $25,000 worth or shares or more.
Under the US regime, shareholders file a resolution to the company, a copy of which is then forwarded to the SEC. If the shareholder meets the criteria, companies can either allow the resolution to go ahead, ask the shareholder to withdraw it or challenge it through the SEC.
“Investors will lose their right to challenge boards,” the CIG letter said. While a number of shareholder resolutions may fail to gain overwhelming support, the CIG argues that proposals by independent investors have helped flag emerging issues to the company before they become a larger concern. “This would simply diminish investors’ ability to seek company disclosure of meaningful financial and other information,” the letter explained.
The C of E has already come up against the SEC while pushing for change at ExxonMobil last year. The regulator allowed the US oil firm to block a resolution that would have forced it to disclose emissions reduction targets. In protest, the C of E called for ExxonMobil to install an independent chairman, and it gained 40% backing.
The CIG’s members primarily hail from the UK and Ireland but also include international groups such as the Church of Norway and the Methodist church in New Zealand.
The SEC declined to comment.