In ESG Investor, James Thomas comments on the importance of proxy advice when deciding proposal outcomes

US policymakers and regulators are increasingly looking to identify, measure and mitigate the effects of climate change, which is further encouraging companies to implement climate-related policies and targets, publicly disclosing their progress.

The SEC has rescinded two elements of rules that were implemented in 2020: the requirement that company management is allowed to respond to proxy advice before it has been issued to shareholders, and the reversal of 2020 changes which the US SEC noted generated confusion around proxy rules’ liability provision. James Thomas, co-head of Ropes & Gray’s registered funds practice and a co-leader of the firm’s asset management mergers and acquisitions practice, told ESG Investor, “the conflict-of-interest disclosure remains.”

“It’s hard to know whether the 2020 or the 2022 amendments strike the right balance between companies and proxy advisors but, given how important proxy advice can be in deciding proposal outcomes, I think people on both sides of the argument should want a process of some sort to allow errors in methodology or data to be corrected,” Thomas said.