ENGAGING SHAREHOLDER ACTIVISTS

The new season of shareholder activists is under way. Corporate leaders and shareholder activists are engaged in a battle with each other and with the US Securities and Exchange Commission (SEC) to determine who is responsible for environmental and social risk assessment. Almost 50 related resolutions, addressing climate change, sustainability reporting, energy efficiency, and specific corporate actions, have been filed this year. Unless withdrawn or omitted prior to a company's annual meeting, these resolutions will come to a vote by shareholders before the end of the summer.

- Shareholder activism continues to evolve in new ways. Increased stakeholder engagement is leading to cooperation rather than confrontation by both shareholders and corporations, with 14 resolutions withdrawn to date.
- The June 2005 SEC Staff Legal Bulletin has not closed down shareholder activists. The SEC has omitted only five resolutions to date, based on its new guidance designed to clarify the differing roles of management and shareholders in risk assessment.
- Shareholder resolutions have expanded to incorporate new industry segments. New targets are joining the energy sector, including insurance companies, financial institutions, and the building and energy equipment supplier industries.

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