US Businesses face challenge over commitments


Companies including Goldman Sachs and BlackRock will be forced to confront accusations of hypocrisy at their upcoming shareholder meetings from investors challenging commitments made by corporate America to consider the environment and their workers alongside profitability.

The companies are among members of the Business Roundtable, one of the largest business lobbying groups in the US, which in August dropped its stance that shareholders alone should benefit from a companies’ actions.

Sceptical activists have launched an effort to compel the firms to detail how they will actually incorporate the landmark pledge into their business practices, and have submitted shareholder proposals for debate at forthcoming annual meetings.

Goldman, BlackRock and Citigroup petitioned to block the resolutions, but this week the US Securities and Exchange Commission said the proposals would have to be put to a vote. The SEC also rejected a bid by Bank of America to block a similar resolution earlier this month.

“Some of the companies are funding major amounts of fossil fuel development, for example, so it is hard to see how they can reconcile their commitment to stakeholders against being major financiers of climate change,” said Sanford Lewis, an attorney who advised on the shareholder petitioners.

The SEC’s rulings set up potentially contentious company annual meetings in the coming months. Though nonbinding shareholder proposals often attract little investor support, the petitions will put pressure on companies to defend their Business Roundtable commitments. 

“BlackRock’s attempt to silence shareholder voices has failed,” said Andrew Behar, chief executive of As You Sow, a California-based non-profit that filed the shareholder proposal at the asset management giant. “We ask that they provide transparency to investors on their implementation plan for their stated shift to stakeholder capitalism.”

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The Bank of America, Citigroup and Goldman Sachs proposals were filed by Harrington Investments, a California-based investment adviser that specialises in socially responsible investing.

The Business Roundtable’s new stance states that the wellbeing of the environment, workers and other stakeholders should be taken into account alongside shareholders.

Responding to the SEC’s rulings on the proposals, a spokeswoman for the lobby group said: “Each of these companies is making substantial investments in their customers, employees and communities, consistent with the statement.”

Companies often ask the SEC for permission to block shareholder proposals. The agency will permit firms to block proposals seen as attempting to micromanage the company. 

“The SEC staff appears to have a taken a different view and determined that the proposals as a whole raise significant policy issues regarding corporate governance that transcend day-to-day business matters,” said Reid Hooper, an attorney at the law firm Covington in Washington.

BlackRock, BofA, Citigroup and Goldman Sachs all declined to comment.



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