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2023 Policy Priorities: Protect Shareholders, Investors and Retirement Accounts from Social Activism

Several pieces of federal legislation seek to protect shareholders, investors, retirement accounts, and others from non-monetary factors like social and political activism. These include:

  • INDEX Act, which would require investment advisors of passively-managed funds to vote proxies in accordance with the instructions of fund investors, not at the discretion of the adviser.

  • Ensuring Sound Guidance (ESG) Act, which would require investment advisors and ERISA plan sponsors to prioritize maximizing financial returns over ESG factors (known as the “pecuniary gain rule”).

  • The Corporate Governance Reform and Transparency Act, which would rein in proxy advisory firms like ISS and Glass Lewis by requiring proxy advisory firms to register with the SEC, disclose conflicts of interest, and make their methodologies publicly available.

  • The Fair Access to Banking Act, which would prevent discrimination by banks and financial service providers against constitutionally-protected industries and law-abiding businesses.

  • State Fiduciary Duty Policies clarifying that focus on pecuniary gain for shareholders supersedes social or political objectives for fiduciaries of corporations registered in the state as well as to state officers with responsibility for public funds.

  • State Non-Boycott Provisions, prohibiting investments from public funds from being invested with firms that boycott the major industry in the state.

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