With a new year, proxy season, and presidential administration, US SIF expects to see new support for environmental, social, and governance (ESG) disclosure and other actions that benefit shareholders, other investors, and society at large.

During the presidency of Donald Trump, the executive branch rolled back environmental protections and imposed constraints on investors who sought to raise concerns about ESG issues.

In September 2020, for example, the SEC promulgated a rule that attacked the ability of investors to file shareholder proposals. Previously, an investor needed to hold $2,000 in stock for one year to be eligible to file a shareholder resolution. Starting in 2022 a shareholder must hold $25,000 of stock for one year, $15,000 for two years, or $2,000 for three years to file. The new rule also prohibits smaller investors from aggregating their shareholdings to meet the ownership requirements.

In addition, from 2017 through 2019, the SEC’s Division of Corporation Finance, which among other duties advises whether publicly traded companies may omit various shareholder proposals, issued three Staff Legal Bulletins (14I, 14J, and 14K). These bulletins essentially announced that Division staff would give companies more leeway to omit shareholder proposals – even on critical issues such as climate change – on the grounds that they involve only “ordinary business” or are not significantly related to their business.

President Biden, in contrast, has made clear that action on climate and other environmental and social issues will be a priority.

Biden’s executive order on Tackling the Climate Crisis at Home and Abroad details his intent to use existing regulatory, procurement, and budgetary powers to advance climate change action. It establishes a National Climate Task Force of the heads of the federal departments and agencies charged with domestic affairs to identify key federal actions to reduce climate pollution, increase resilience to climate change impacts, and spur well-paying union jobs and equitable economic growth and benefits.

The executive order does not specifically mention financial regulatory bodies such as the SEC. However, US SIF was heartened that Acting SEC Chair Allison Herren Lee created a new position in her office – Senior Policy Advisor for Climate and ESG – filled by Satyam Khanna. Khanna’s brief is to advise the SEC on ESG issues and “advance related new initiatives across its offices and divisions.” The new post aligns with US SIF’s request in the policy document it submitted to the Biden transition team to appoint a sustainable investment advisor in the Chair’s office.

Another promising recent appointment is that of John Coates, a corporate governance expert, to acting Director of the Division of Corporation Finance.

Biden has also nominated Gary Gensler, the former Chair of the Commodity Futures Trading Commission under President Barack Obama, to chair the SEC. His appointment has been hailed by Senator Elizabeth Warren, Americans for Financial Reform, and others who would like the SEC to provide greater protection for investors, including ESG disclosure and expansion of shareholder rights.