SEC Rule Changes Force Investors to Hold Fire
UnitedHealth Group is the latest company to utilise new guidance, as shareholders figure out their shifting rights.
The US Securities and Exchange Commission’s (SEC) decision to move the goalposts for allowing shareholder proposals has forced investors to withdraw ESG-focused resolutions this proxy season.
Most recently, members of the Interfaith Center on Corporate Responsibility (ICCR) pressed pause on a proposal filed at health insurer UnitedHealth Group (UNH).
Issued in February, Staff Legal Bulletin (SLB) 14M reinstates previous guidance on micromanagement that had been rescinded by SLB 14L, making it easier for companies to submit successful ‘no action’ requests to the SEC. SLB 14M retroactively applies to shareholder proposals written specifically to comply with previous guidance.
The UNH proposal requested that the company’s board of directors prepare a report on the public health-related costs and macroeconomic risks associated with the company’s practices that limit or delay access to healthcare.
“Escalating health insurance costs threatens patients’ health, creates long-term reputational and legal risks for the company, and poses broader risks to the economy that may undermine investor portfolios,” Meg Jones Monteiro, the ICCR’s Senior Director of Health Equity, told ESG Investor.
“Our proposal makes the case for greater transparency and strengthened oversight around these policies to mitigate these risks.”
As one of the US’ largest health insurance firms and its largest employer of physicians, UNH has garnered significant media attention as well as congressional and regulatory scrutiny for denying and delaying care to policyholders.
Prior to the SEC’s new guidance, UNH had already attempted to file a no action request.
“SLB 14M – issued mid-proxy season – gave UNH permission to issue another challenge to the proposal based on whether it addressed a ‘significant social policy issue’,” said Monteiro.
“The timing and additional challenge had the effect of foreclosing the possibility of an effective investor rebuttal and scuttled the possibility of getting the proposal on the proxy for a shareholder vote at the AGM.”
To protect the proponents’ options to file in the future, the ICCR and its members made the “difficult decision” to withdraw the proposal, she said.
“It is unprecedented that mid-proxy season the staff would issue a legal bulletin that allows companies to make new challenges outside of the allowed period – yet does not allow investors to adapt or amend resolutions in response to the new guidance,” she said. “We view this as a direct attack on shareholder rights.”
Greater caution
Other investors filing ESG-focused shareholder proposals at US companies may be forced to follow suit this proxy season.
“There’s certainly an atmosphere of greater caution among filers of shareholder proposals this year, and it’s reasonable to conclude that the SEC’s updated guidance in February has a strong influence on that,” said Lindsey Stewart, Director of Stewardship Investment Research and Policy at research and data provider Morningstar Sustainalytics.
“The prevailing opinion is that SLM 14M will permit companies to exclude a greater proportion of shareholder proposals, so there’s greater incentive for proponents to withdraw a resolution and preserve the option to amend and retry in future.”
The new guidelines make many determinations more subjective, agreed Sanford Lewis, Director and General Counsel of investor body the Shareholder Rights Group.
Lewis said a proposal is more at risk of exclusion if it seeks specific outcomes, such as reducing greenhouse gas (GHG) emissions, rather than asking for disclosure in an outcome-agnostic way, such as requesting the disclosure of GHG emissions, related targets or decarbonisation progress.
“It is riskier for a proposal to request a detailed disclosure than in a general and flexible form – for instance, a whole group of proposals with specific lobbying disclosure requests were blocked as micromanagement,” said Lewis.
Investors filed almost 600 resolutions related to lobbying activities between 2010 and 2023.
The 2025 iteration of ‘Proxy Preview’ logged 355 ESG-related shareholder proposals filed this season. Eighty-six of these resolutions concerned climate change, followed by corporate political influence (77), environmental management (52), and human rights (37).
However, 2025 has seen a 34% drop in the number of shareholder proposals filed compared to the previous year, while the number of anti-ESG proposals continues to grow – from 23 in 2021 to 62 as of March 2025.
In parallel, the SEC has gradually distanced itself from ESG-specific regulation and enforcement, a trend which has accelerated since Donald Trump secured a second term in the White House.
Last year, the SEC disbanded its Climate and ESG Task Force, which formed part of its Division of Enforcement.
Last month, the regulator voted to end its legal defence of its climate-related disclosure rule, which requires public companies to disclose their exposures to financially-material climate risks.
The US Supreme Court has also restricted the ability of agencies like the SEC to impose penalties for violation of laws through administrative tribunals, insisting that such penalties must now be adjudicated in the courts, while simultaneously removing the six-year statute of limitations on challenges to new regulations.
Other levers
Despite the SEC’s new restrictions, investors can pursue other avenues to escalate their ESG-focused engagement efforts.
“If investors are concerned that company management is feeling market pressure to make decisions that threaten critical systems, they can engage with [corporate] management to explain that most investors have diversified portfolios that depend upon the long-term health of the economy, and that they will support management from pressure to take short cuts that threaten those systems,” said Rick Alexander, CEO of The Shareholder Commons.
In addition, investors can choose to withhold their votes against directors and board members, as well as their executive pay packages, he suggested. A separate SEC rule change, however, discourages investors from using voting power as leverage in engagement meetings.
“As decisions come out, proponents are trying to understand how the new interpretation will work,” Alexander added.
“This confusion, combined with the late-stage change in interpretation, may lead to proponents believing the best course is to start fresh after the dust has settled around the new interpretations.”
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