The House Financial Services Committee held a hearing yesterday titled “Reforming the Proxy Process to Safeguard Investor Interests”—and NAM Managing Vice President of Policy Chris Netram was there to represent manufacturers. The committee is in the middle of a monthlong series of hearings on environmental, social and governance topics and other issues related to the proxy process.
The background: Manufacturers often face challenges from politically motivated activists who use the proxy voting process to gain attention for issues unrelated to the companies’ success, and from a Securities and Exchange Commission that has empowered these activists.
The topline: At the hearing, Netram called on Congress to rein in the SEC’s regulatory overreach, keep activists out of the boardroom and protect Americans’ investments in manufacturing growth.
- “Focusing on financial returns helps businesses grow and safeguards investors’ retirement security,” said Netram. “But in recent years, third parties have hijacked the proxy process to distract companies from this duty: activists use the proxy ballot to advance political and social agendas, proxy firms dictate corporate governance decisions, and the SEC is empowering these groups—while also proposing ESG disclosure mandates of its own.”
Depoliticizing corporate governance: Netram called on Congress to stop activists from abusing the proxy ballot to pursue social and political agendas. That means preventing the SEC from forcing companies to include irrelevant proposals on their ballots, and instituting further reforms like making it harder for activists to resubmit the same unpopular proposals regularly.
- “Turning the proxy ballot into a debate club diverts time and resources away from shareholder value creation and forces companies to wade into controversial topics over which they have no control,” said Netram. “Congress must prevent the SEC from forcing companies to include irrelevant proposals on their ballots.”
Reining in proxy advisory firms: Netram spoke about the need to restrict the outsized influence that proxy advisory firms exercise on corporate governance, including by protecting investors from conflicts of interest, enforcing antifraud standards, limiting robo-voting and requiring proxy firms to engage with impacted businesses.
- “Despite their power, proxy firms operate with minimal regulatory oversight—and the SEC has rescinded modest protections that were adopted in 2020 to inform and protect investors,” said Netram. “This means that the firms’ conflicts of interest, errors and lack of transparency go largely unchecked.”
Pushing back on ESG disclosure mandates: Netram also called on Congress to limit the SEC’s ESG reporting rules by requiring only material disclosures from public companies rather than demanding far-reaching information that increases costs for manufacturers and overwhelms investors.
- “Investors need material information to make informed investing decisions and grow their retirement savings,” said Netram. “Instead, the SEC has proposed far-reaching mandates that won’t inform investors—but will harm manufacturers. Congress must limit the SEC’s regulatory onslaught.”
The last word: “Politically motivated activists are pursuing inflexible ESG agendas with little regard to their impact on everyday Americans’ financial security—and the SEC is increasingly a partner in their effort,” said Netram.
- “If this trend is allowed to continue, then small manufacturers will be hardest hit. I’ve spoken to NAM members who are deeply concerned about potentially losing public company customers or facing insurmountable regulatory costs because they just can’t keep up with ESG.”
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org