Defending faithful investing

LOUISVILLE — Presbyterians are being urged to write to the U.S. Security and Exchange Commission opposing its proposed elimination of a rule that ensures adequate corporate disclosure. Eliminating the rule, according to an Action Alert issued this week by the Office of Public Witness, will impede faith-based investors like the Presbyterian Church (U.S.A.) from exercising religious freedom.

For decades, the PC(USA) has, through its Office of Faith-Based Investing and Shareholding Engagement, been using its voice as a shareholder to advocate for the justice policies of the denomination. A key part of that advocacy is filing shareholder resolutions with companies, asking them to disclose information, to measure and report on the potential impacts of their operations or to adopt or change policies and practices to mitigate against those potential impacts.

Shareholder resolutions have been crucial in getting companies to respond to the PC(USA)’s concerns and have resulted in dialogues and actions that can bring a company’s activities better into alignment with the denomination’s justice values while improving company performance. In the last 16 years, the PC(USA) has filed more than 50 shareholder resolutions.

Now the SEC has proposed rescinding rule 14a-8, which allows for the shareholder resolution process. Created in 1942, Rule 14a-8 establishes a uniform system for ensuring adequate corporate disclosure. By repealing this rule, the SEC is preventing shareholders from getting the information they need and preventing faith-based investors like the PC(USA) from exercising religious freedom through the shareholder process. Shareholder resolutions have helped expose financial risks, strengthen corporate governance and protect long-term values. Taking away this tool would leave investors with fewer ways to spot problems before they become costly and would give corporate executives more power.

The PC(USA) believes that church investment is more than a practical question. It is also, in the words of the UPCUSA’s 183^rd General Assembly (1971), “an instrument of mission and includes theological, social and economic considerations.” In 1985, the 197^th General Assembly noted “the importance of the church’s stewardship of its resources, including the management of its investments in a manner consonant with its commitment to justice.” The recission of Rule 14a-8 would make this stewardship and management much more difficult.

What you can do

The Securities and Exchange Commission is accepting comments through Nov. 20 on its proposal. Click here to complete the SEC Comment Form.

Here’s some suggested language: 

“Dear Securities and Exchange Commission:

“I oppose the SEC's proposal to eliminate the shareholder resolution rule. Shareholders are owners, and owners deserve a voice in the companies they invest in.

“[Mention how you individually, or your church or mid council, relies on proxy voting guidance from the PC(USA), if you do].

“Investing in ways guided by our faith is key to our success and long-term value. We view our investments not just as vehicles for financial returns but as an expression of our faith. The Presbyterian Church (U.S.A.) has been using its voice as a shareholder for more than 55 years and has engaged hundreds of companies on issues that affect the company’s long-term financial value. These engagements have often led to constructive discussions prompted by the filing of a shareholder resolution.

“I urge the SEC to reject this proposal and preserve shareholder rights.”

For additional guidance on submitting a more detailed letter, this template provides sample language and instructions on how to submit your comment. You may access the proposed rule or directly submit comments via the SEC website here. 

Please reach out to Katie Carter at [email protected] with any questions.