Corporate governance has become increasingly politicized in recent years, with very real consequences for investors and financial institutions of all kinds. From a looming funding crisis facing the nation’s public pension system to the emergence of quasi-regulators operating with unchecked powers and limited scrutiny, there has been increased focus on politically motivated investments, often at the expense of traditional fiduciary responsibility aimed at maximizing returns.
The Securities and Exchange Commission (SEC) should be commended for its decision last week to rescind two previously issued guidance letters that had allowed third-party firms known as “proxy advisors” to wield undue influence over the shareholder proposal process.
The withdrawal of the SEC letters could help the bill’s supporters achieve their goals without Congress. “It’s a great first step toward genuine reform of the way these proxy advisory firms have exerted their influence over corporate governance matters,” said Tim Doyle, vice president and general counsel of American Council for Capital Formation, which supports the bill.
Agencies that judge companies according to their environmental, social and governance metrics suffer from wildly diverging standards and “inherent biases”, according to a report by the American Council for Capital Formation.
Research & Publications
EXECUTIVE SUMMARY As the trend of Environmental, Social, and Governance (“ESG”)1 investing has risen, so too has the influence and relative importance of ESG rating...
A new ACCF report finds that proxy advisory firms are currently operating with minimal oversight, making recommendations that materially impact public companies’ proxy outcomes, operations and disclosure requirements.
Bad Apple: New ACCF Report finds New York City’s public pension fund system in bad shape and getting worse