As detailed below, the SEC has a long record of supporting genocide-free investing shareholder proposals being able to appear on proxy ballots for consideration by shareholders. That changed when the SEC changed its policies resulting in the 2019 and 2020 rulings against genocide-free investing. Since the SEC rescinded those policy changes in 2021, Investors Against Genocide believes that genocide-free investing shareholder proposals would once again withstand challenges. However, given the long efforts to engage BlackRock, Fidelity, Franklin Templeton, JPMorgan, and Vanguard, and the resistance of those companies to genocide-free investing over the years 2006 through 2020, we recognize that we have probably made as much progress as we can achieve with those companies. Therefore, Investors Against Genocide is suspending efforts to submit shareholder proposals on genocide-free investing.
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November 3, 2021 – SEC Staff Legal Bulletin 14L changes rules back
This SEC Staff Legal Bulletin effectively removed the restrictive rules that allowed Vanguard and JPMorgan to block Genocide-free Investing in the 2020 and 2019 rulings, below. In addition to the details on “micromanagement” and “ordinary business” in the Staff Legal Bulletin, these SEC changes were widely covered. For examples, see the WSJ article, SEC Rescinds Trump-era Policy, Eases Path for Shareholder Proposals on Environmental, Social Issues and similar articles here, here, and here.
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September 11, 2020 – SEC ruling for Vanguard and against Genocide-free Investing
In a detailed test of the change in policy of the SEC, Investors Against genocide extensively argued the case for Genocide-free investing being approved to appear on Vanguard’s proxy ballot. The SEC rejected these arguments and ruled in favor of Vanguard’s claims that the GFI proposal should be excluded because it relates to “ordinary business” and “micromanages the Company.” Once again, Vanguard provided no new arguments to support this case. Apparently, as with the 2019 JPMorgan case, the SEC was pursuing a new policy which makes it more difficult for ESG-related shareholder proposals to get on the proxy ballot for shareholders to consider.
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March 13, 2019 – SEC reverses itself ruling for JPMorgan and against Genocide-free Investing
Despite a long history of ruling in favor of genocide-free investing, the SEC reversed itself and ruled in favor of JPMorgan’s claims that the GFI proposal should be excluded because it relates to “ordinary business” and “micromanages the Company.” JPMorgan provided no new arguments to support this case. Apparently the SEC was pursuing a new policy which makes it more difficult for ESG-related shareholder proposals to get on the proxy ballot for shareholders to consider.
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March 29, 2018 – SEC ruling against JPMorgan
The SEC denied JPMorgan’s request to exclude the GFI-related “Proposal to Report on Investments Tied to Genocide” from the proxy ballot. The SEC rejected JPMorgan’s creative word counting that claimed that the proposal was over the 500-word limit for shareholder proposals. The SEC also rejected JPMorgan’s claim that the proposal should be excluded because it dealt with “ordinary business” and because it “seeks to micro-manage the company.”
The proposal focused on JPMorgan’s resistance to genocide-free investing despite its published corporate values that suggest that JPMorgan wants to do the right thing. The 2018 proposal states:
Shareholders request that the Board of Directors report to shareholders, at reasonable expense and excluding confidential information, an analysis of how JPMorgan’s published corporate values align with its policies regarding investments in companies tied to genocide or crimes against humanity, and specifically explain how its investments in CNPC/PetroChina are consistent with its published corporate values.
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April 15, 2014 – SEC ruling against JPMorgan
The SEC denied JPMorgan’s request to exclude genocide-free investing from the proxy ballot, rejecting the claim that “the Proposal relates to operations which account for less than 5 percent of the Fund’s total assets at the end of its most recent fiscal year, and for less than 5 percent of its net earnings and gross sales for its most recent fiscal year, and is not otherwise significantly related to the Fund’s business.”
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December 30, 2013 – SEC ruling against Franklin Resources
The SEC denied Franklin Resources’ request to exclude genocide-free investing from the proxy ballot, rejecting all five bases for exclusion argued by Franklin Resources. The SEC stated, “In our view, the proposal focuses on the significant policy issue of human rights and does not seek to micromanage the company.” It also stated, “Based on the information you have presented, it appears that Franklin’s policies, practices, and procedures do not compare favorably with the guidelines of the proposal and that Franklin has not, therefore, substantially implemented the proposal.” The SEC rejected Franklin Resources claims that the proposal was “materially false or misleading” and ruled that the proposal did not “impugn character, integrity or personal reputation, or make charges concerning improper, illegal or immoral conduct or associations, without factual foundation.”
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May 10, 2013 – SEC ruling demonstrated the value of genocide-free investing
The SEC ruled that TIAA-CREF’s support for genocide-free investing allowed it to exclude other shareholder proposals from special-interest groups asking the institution to consider more controversial human rights concerns. Although some might worry that agreeing to a genocide-free investing policy might open the door to every human rights issue, no matter how small or controversial, this SEC ruling rebuts the concern of a “slippery slope.” In this SEC ruling, TIAA-CREF’s support for genocide-free investing made it harder, not easier, for special-interest groups to push the institution to consider more controversial human rights concerns. The SEC supported TIAA-CREF in resisting efforts from a shareholder seeking to force the firm into divestment which management felt was inappropriate. The SEC supported TIAA-CREF’s response that it had substantially implemented “a policy for identifying portfolio companies to engage on a broad range of matters including human rights matters and divesting from companies when judged appropriate” and proving it by saying that “CREF divested from several companies with ties to the government of Sudan.” This SEC decision showed that a policy that responded to issues with broad public support and consensus would assist in deflecting pressure to react to more controversial political disputes.
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May 7, 2012 – SEC ruling against ING
The SEC rejected ING’s claims that “the Fund has already substantially implemented the Proposal;” that “the Proposal directly conflicts with a proposal of the Fund;” and that “the Proposal deals with matters relating to ordinary business.”
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March 8, 2011 – SEC ruling against JPMorgan
The SEC rejected JPMorgan’s claims that “the Proposal is materially false and misleading” and that the proposal is “so inherently vague or indefinite as to make the entire Proposal materially misleading.”
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January 22, 2008 – SEC ruling against Fidelity
This first test at the SEC showed support for our argument that the genocide-free investing proposal raises significant social policy issues. The SEC rejected Fidelity’s claim that “the proposal deals with a matter relating to the company’s ordinary business operations;” and that the proposal included “materially false or misleading statements.”
