Donald Trump won the recently concluded presidential elections in the U.S. and is set to be sworn in as the 47th president come January. While ESG was not a primary focus in the president-elect’s campaign, he did pledge to remove America from the 2015 Paris agreement and increase domestic production of oil and gas.
This is in addition to vowing to fire Chairman Gary Gensler of the Securities and Exchange Commission (SEC). This shan’t happen though, as earlier this week, Gensler announced that he’d resign from the agency on January 20th, 2025.
The chairman’s impending departure has raised questions over the future of the climate disclosure rule under a new chairperson. Another issue raised is the regulator’s approach to shareholder proposals in the ESG space.
In Trump’s former administration, the SEC allowed firms to exclude shareholder proposals on issues to do with ESG. The commission also introduced new requirements for submitting proposals, which included the duration of stock ownership and amount of stock held. This is in addition to the votes needed for resubmission.
When President Biden entered office in 2021, the balance of power shifted to the investors and away from the firms. While this did lead to an increase in filings of social and environmental proposals, some have raised concerns over the quality of some.
Professionals believe that how the ESG space will be affected depends on how fast a new SEC chair is appointed. A veteran U.S. lawyer, Con Hitchcock, echoes this sentiment.
Founder and director of the Shareholder Rights Group, Sanford Lewis, argues that a delay in appointing a new division director and chair could impact the efficiency with which the commission deals with proposals. Hitchcock adds that filers may need to be more conservative in the proposals they submit next year.
It is expected that if it becomes more challenging to get ESG shareholder proposals included in the ballot, investors may use alternative routes to hold companies accountable.
Boston Common Asset Management’s Head of stewardship and engagement, Lauren Compere, posits that investors may publicize their criticisms or even file lawsuits against firms on issues like greenwashing or corporate fraud. However, she adds, these alternative methods are less conducive and more disruptive for any meaningful dialogue.
This sentiment is echoed by Lewis, who explains that investors looking into possible legal actions to take won’t be useful. He adds that this would be unfortunate, as the dialogue and debate facilitated by shareholder proposals underscored important issues.
Various companies like Energy and Water Development Corp. (OTCQB: EAWD) could also be assessing how the new administration in Washington, D.C. may impact the progress of ESG growth and implementation.
NOTE TO INVESTORS: The latest news and updates relating to Energy and Water Development Corp. (OTCQB: EAWD) are available in the company’s newsroom at https://ibn.fm/EAWD
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