Category: Congress

What Happened on Tuesday?

What Happened on Tuesday?

sgicoalition

By Frank Sherman

The busy news cycle didn’t give enough attention to the signing of the Inflation Reduction Act (IRA) by President Biden this past Tuesday, representing the single largest action ever taken by Congress and the U.S. government to combat climate change. It has been a long time coming since the first Congressional hearings on the topic in 1988. Not that Congress hasn’t tried. There have been plenty of false starts on legislation to tackle GHG emissions; however, various forces profiting or otherwise benefiting from the fossil fuel economy have prevailed…..until Tuesday.

While the size of the package is a fraction of the Build Back Better Act passed by the House in November, the emissions reduction components are nonetheless robust and effective. The climate solutions and environmental justice provisions in the $369-billion package will impact nearly every corner of the US economy. Given the unanimous opposition to the bill by Republicans and the slimmest of margins in the Senate, the Democratic reconciliation bill also contains some financial support for the fossil fuel sector, but, as a whole, it represents a major step forward in the fight to preserve a livable planet.

What does $369 billion buy you (EarthJustice)?

  • Accelerates the clean energy transition and lowers energy costs by…
    • Expanding access to clean energy by making clean energy tax credits more accessible and extending them by 10 years.
    • Creating jobs and increases our country’s energy security by investing $60 billion in manufacturing solar panels, batteries, and other clean energy technologies in the U.S.
    • Providing funding for low-income families to electrify their homes, including $9 billion in home energy rebate programs.
    • Removing barriers to community solar.
  • Helps transition the transportation sector away from fossil fuels by…
    • Proving tax credits for electric vehicles;
    • $3 billion for the U.S. Postal Service to electrify its fleet;
    • $1 billion for clean school and transit buses, garbage trucks, and other heavy-duty vehicles, prioritizing communities overburdened by air pollution; and
    • $3 billion to clean up air pollution at ports by installing zero emissions equipment and technology.
  • Supports communities of color and low-income who face disproportionate harms from pollution and the climate crisis with…
    • $3 billion for community-led projects;
    • $315 million for air monitoring; and
    • Reinstatement of the Superfund Tax.
  • Advance practices that make farming climate-friendly with…
    • $20 billion to help farmers and ranchers shift to sustainable practices like crop rotation and cover crops; and
    • $300 million for research into the climate impact of agricultural practices.
  • Support natural climate solutions with…
    • $2.6 billion in coastal resilience grants to fund projects;
    • $1 billion to ensure federal agencies can conduct robust environmental and NEPA (National Environmental Policy Act) reviews;
    • $250 million to implement endangered species recovery plans; and
    • $50 million to advance protections for mature and old-growth forests.

Individuals will see these benefits with a 30% tax credit for installing residential solar panels; up to $7,500 tax credit for purchasing an electric vehicle; up to $14,000 credits for home energy efficiency upgrades, including up to $8,000 to install a heat pump; and an average savings $1,800 per year on energy bills and make their costs more stable and predictable compared with volatile fossil fuel prices.

The IRA represents major progress by Congress, but more action will be needed for the US to meet its 2030 target of reducing emissions by 50-52% below 2005 levels (Rhodium Group). This restores some credibility to the US to maintain global leadership on climate change. The effort is by no means over. Eve with the IRA enshrined as law, we must advocate, and ask our portfolio companies to do the same, with federal agencies and states, as well as Congress, to pursue additional actions to close the emissions gap.

You may have missed it, but Tuesday was a great day for people and planet.

SGI joins Major U.S. Companies and Investors To Urge Congress to LEAD on Climate

SGI joins Major U.S. Companies and Investors To Urge Congress to LEAD on Climate

Chris Cox

SGI participated in a delegation of more than 100 large companies and investors to meet with key lawmakers of both parties this week to ask them to LEAD on Climate 2022. It was a united call for Congress to pass an ambitious package of federal clean energy, transportation, infrastructure, and advanced manufacturing investments.

Best Buy, bp America, Gap, General Mills, HPand Microsoft were among the major U.S. employers, innovators, and manufacturers spanning all sectors of the economy participating in this advocacy event. Representatives from the participating organizations met with lawmakers and Congressional staff on Wednesday, May 11, and Thursday, May 12, in virtual forums. 90 meetings were scheduled over this two-day period.

View the full list of LEAD on Climate 2022 participants here.

This fourth annual business advocacy event gives leading companies and investors the opportunity to make the strong economic case for federal climate action, elevating their calls for clean energy and environmental justice investments that will bolster the nation’s competitiveness, lower energy costs, strengthen domestic supply chains, and confront the threat of the climate crisis. U.S. Sen. Sheldon Whitehouse, Siemens Corporation’s Barbara Humpton, PSEG’s Ralph Izzo, and Hannon Armstrong’s Susan Nickey participated in a virtual roundtable and media briefing as part of LEAD on Climate 2022 on May 11th.

Representing SGI in the meetings, associate director Chris Cox said, “Fr. Mike Crosby began making the moral and business case for addressing climate change decades ago. It’s an honor to continue this work in pressing for environmental justice, as the harms of climate fall most heavily on the poor, those on the periphery.”

Organized by the sustainability nonprofit Ceres, LEAD on Climate 2022 features companies and investors that collectively count more than $1.6 trillion in annual revenue and $4.6 trillion in assets under management, and that employ more than 3 million people in all 50 states. The event comes at a critical time when Congress considers major investments in clean energy, transportation, and infrastructure, as well as the advanced manufacturing and supply chain capabilities to support it, either through a budget reconciliation deal or a bipartisan energy package.

Specifically, companies and investors are calling for Congress to:

  • Meet the urgency and scale of the climate crisis with ambitious federal investments to accelerate the transition to affordable, secure, domestic clean energy.
  • Seize the economic opportunities to lead the world in clean energy manufacturing and deployment to create jobs, spur innovation, strengthen supply chains, and reduce costs and price volatility for businesses and consumers. 
  • Tackle inequity by targeting climate and clean energy investments in disadvantaged, rural, and frontline energy communities.

This is the second year that SGI has supported Ceres’ LEAD on Climate. With the midterm elections quickly approaching, the window is closing for the last, best chance of getting significant federal climate and clean energy investments passed in time to meet our climate, energy, and economic security goals.

Click here to watch the full recording of the roundtable and media briefing.

Bill Bars Forced Arbitration in Sexual-Assault, Harassment Claims

Chris Cox

Congress has passed legislation to ban mandatory arbitration clauses for cases involving allegations of sexual harassment or assault. With the Senate having passed it yesterday, the bill, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA), will now go to President Biden, who is expected to sign it into law.

EFASASHA will invalidate most contractual provisions requiring the arbitration of claims alleging sexual harassment or sexual assault. Once in effect, EFASASHA will apply to all pre-dispute arbitration clauses, including those in contracts executed before the law’s enactment.

The new law may have an outsized impact in the asset management industry, given firms’ reliance on arbitration to resolve all manner of disputes. Companies will need to re-examine their approach to dispute resolution and to their anti-harassment initiatives more broadly.

SGI is pleased to have been a part of earlier efforts to ask companies to remove these unjust clauses from employment contracts. Cindy Bohlen of River Water Partners led engagements with a number of companies in her firm’s portfolio, and she wrote about it here in SGI’s blog.

Of the bill, Cindy Bohlen said, “Corporations will be required to have strong policy regarding remedy following allegations of sexual misconduct, including the right to legal action. This change will ensure that employees feel comfortable coming forward in such cases, which will promote inclusive and healthy corporate culture, benefitting employees and corporations alike.”

In these partisan days, we believe that investor outreach contributed to the passage of this bill in both chambers by wide margins.

Barely Building Back Better

Barely Building Back Better

Natalie Wasek

All eyes and ears are open to learn what might be cut next from the Biden Administration’s Build Back Better Plan. News reports are fast and furious with the latest hints that come out of the room where it happens. The social policy bill initially set at $3.5 trillion is being cut to under $2 trillion resulting in a debate over what can be cut out and not be missed, and what can be decreased and still make an impact. 

This isn’t however, just about the top line cost decision, though it is being presented that way by the media. The impact on real people and society cannot be separated from this price tag. The focus has been on the cost of the bill if it passes rather than the cost to society if this doesn’t pass. 

The bill includes policies for child tax credits, paid family and medical leave, lower childcare costs, lower higher ed costs, lower prescription drug prices, clean energy and electricity, forest management, penalties for methane leaks, and programs for the formerly incarcerated, among others. Corporations are actively lobbying against the bill, in opposition to increased corporate taxes, expanded Medicare, and fees for carbon emissions. Yet businesses admit that they will benefit from the childcare, healthcare, education and climate provisions in the bill. One Senator remains firmly against the clean electricity provisions in the bill, despite the fact that his state of West Virginia is the most vulnerable to flooding due to climate change (The Daily, Oct 20, 2021). Another Senator opposes any corporate or income tax rate increase yet voted against those Trump-era tax breaks in 2017 (MSNBC, Oct 21, 2021).

SGI members had an opportunity to discuss the Build Back Better plan at our fall meeting. We discussed how SGI’s priorities align with the proposed plan and asked “if you were in Congress and had to make the decision, what would you cut from the bill?” It is not an easy question to answer, nor were we necessarily looking for our members to have the answer. Rather, we wanted our members to better understand the impact this bill could have on families, society, and the climate crisis. 

Rev. Dr. Liz Theoharis put it simply when addressing attendees at our annual conference: “we have to restructure our society around the needs of the poor.” If we created this divide and allowed poverty to exist, we can restructure the economy to get rid of it. This bill, if not cut to mere scraps, could have a significant role in doing just this. 

SGI members disagree that the U.S. can’t afford the bill, and believe that the positive impact would far outweigh the monetary implications that are being argued over. This seemingly endless debate is a balancing act: weighing the impact of social safety against climate change. Paid family leave and child care, which are ways to address poverty, would make for better employees and thus be good for business. And, at this point in the game, one would think that the climate crisis should speak for itself. However, ironically, the US and 14 other countries are pledging to increase fossil fuel extraction over the next decade. 

This is all to say that the challenges the Build Back Better Plan hopes to address are not going to disappear and will only get worse. 

As investors, SGI members are engaging companies on many of these issues, stressing the importance of climate action, paid family leave, affordable drug pricing, responsible lobbying, etc. They see the importance of putting dignity to workers and individuals first and are asking companies to do the same. But we also know that these voluntary actions are not enough. It’s time for our elected officials to stand up.

Battle for Shareholder Rights Shifts to the SEC

Battle for Shareholder Rights Shifts to the SEC

Chris Cox

By Frank Sherman

Within the toolkit of a shareholder, the right to propose resolutions for consideration by fellow shareholders is one of the most critical to influence corporate behavior (see SGI blog article posted last year). Further, other tools may be less effective without a robust right to propose resolutions. Many companies find a dialogue preferable to a resolution. Without the risk of a resolution, more companies may choose to forgo dialogues with shareholders. Thus, efforts to restrict shareholder rights are alarming, and those rights are under attack on a number of fronts.

Last year, the House of Representatives threatened this right with passage, along party lines, of the Financial Choice Act (H.R. 10) . The bill would have replaced large parts of the 2010 Dodd–Frank Act and increase the ownership threshold for filing resolutions from $2,000 to 1% of common stock outstanding, and extend the stockholding duration requirement from one year to three years (Harvard Law School Forum). The 1% threshold means that an investor would need about $10 billion in shares to file a resolution with Apple or Amazon and would foreclose the resolution process to all but the largest shareholders. In the Senate, the companion bill (S. 2155) got out of Committee but, fortunately, never made it to the floor.

Another bill aimed to regulate proxy advisory firms like Institutional Shareholder Services and Glass Lewis. As well, the recently proposed bipartisan Senate bill S. 3614 – Corporate Governance Fairness Act (Reuters) is less onerous than H.R. 4015 – Corporate Governance Reform and Transparency Act which passed the House last year (CNBC).

Legislative gridlock means that the battle shifted to the Security and Exchange Commission, who held a Proxy Process Roundtable on Nov 15th. In addition to the shareholder proposal rules, the Roundtable had panels on the proxy voting mechanics and technology and proxy advisory firms.

Investors were well represented in the Roundtable panels by the NYC pension fund, Trillium, CalSTRS, AFL-CIO, and Blackrock. Although opposing views were voiced by the Business Roundtable and the U.S. Chamber of Commerce, investor advocates had a compelling argument. In answer to the Chamber’s argument that the shareholder proposal process was one of the factors driving companies away from IPOs, Brandon Rees (AFL-CIO) noted that “the average public company receives a shareholder proposal only once every 7.7 years, and so it was preposterous to suggest that shareholder proposals were a reason companies avoided going public.” Harvard Law School Forum reported that “most panelists for this topic seemed to view the shareholder proposal system as relatively smooth functioning and didn’t offer that much criticism.”

Given these threats, SGI and some of our members submitted letters to the SEC supporting the current proxy rules as being fair and efficient. 

The topic of proxy process and rules returned to Congress last week when the Senate Banking Committee held a hearing on December 6th. The Chamber again testified that companies and their shareholders have been targeted over social and political issues that are unrelated to and, sometimes, even “at odds with” a public company’s long-term performance. Committee Chair Sen. Michael Crapo (R-ID) seemed to agree, stating “it is time to re-examine the standards for inclusion of these proposals as well as the need for fiduciaries to vote all proxies on all issues in light of the proliferation of environmental, social or political proposals, and the rise of diversified passive funds.” On the other hand, Michael Garland (NYC pension funds) defended shareholder rights and the proxy advisory firms stating “Many of those who are the subject of the proxy analysis do not like to be criticized and receive negative vote recommendations...”

SEC Chairman Jay Clayton amplified these attacks on shareholder rights in a speech at Columbia University on the same day. He indicated that review of the ownership and re-submission thresholds for shareholder proposals will be a priority item for the Commission in 2019.

While some will work to erode the rights of shareholders, we will continue to work with the investor community to protect the voice of shareholders.

Why you should be concerned about the 2018 Farm Bill

Why you should be concerned about the 2018 Farm Bill

Chris Cox

by Frank Sherman

Why should people of faith and socially responsible investors pay attention to this year’s Farm Bill? What may appear to be an innocent funding bill turns out to have a major impact on things we care about.

The Farm Bill is renewed every five years. It was initially conceived during the Great Depression to provide fair prices for both consumers and farmers, as well as access to quality food and protection for natural resources. In 1965, funding for the Supplemental Nutrition Assistance Program (SNAP or food stamps) was combined with the support for commodity prices into a single omnibus bill because neither bill was able to pass on its own. Food stamps now make up almost 80% of the Farm Bills’ funding helping over 45 million Americans.

In a recent article in The New Republic  (The Farm Bill Is Everything That’s Wrong With Congress), Alex Shephard argues that the 2018 Farm Bill has little to do with farms or farmers. Most of the debate revolves instead around a host of other issues, like the deep cuts and “work requirements” for the food stamp program and draconian immigration reforms. The House version of the 2018 Farm Bill, which passed by a narrow margin in June, includes harmful and unnecessary barriers to access, like burdensome work requirements. On the other hand, the U.S. Senate version protects SNAP and includes pilot programs to connect SNAP recipients to work through effective employment and training programs. It is now up to a Conference Committee to work out the differences.

In 1965, funding for the Supplemental Nutrition Assistance Program (SNAP or food stamps) was combined with the support for commodity prices into a single omnibus bill because neither bill was able to pass on its own. With food stamps now helping over 45 million Americans, making up almost 80% of the Farm Bill’s funding, this situation has grown only more dire under this polarized Congress. The House version of the 2018 Farm Bill, which passed by a narrow margin in June, includes harmful and unnecessary barriers to access, like burdensome work requirements. On the other hand, the U.S. Senate version protects SNAP and includes pilot programs to connect SNAP recipients to work through effective employment and training programs. It is now up to a Conference Committee to work out the differences.

The premise of the additional work requirements (there are already work requirements in the current SNAP program) in the House Bill — that somehow people who use SNAP are lazy — is fundamentally wrong. Most adults on SNAP work and nearly 70% of SNAP participants are in families with children. According to the Center on Budget and Policy Priorities, SNAP provides a nutritionally adequate diet to 1 in 3 children (here)! Research shows children who benefit from SNAP are likelier to have better health and educational outcomes as adults. Johns Hopkins Bloomberg School of Public Health’s Center report that a majority of registered voters oppose recent efforts to scale back SNAP food benefits and believe the government should be doing more to meet the needs of people facing food insecurity. However, pressure from the White House to pass the House version and the midterm elections to will make it difficult for GOP Senators to preserve their bipartisan bill.

Okay, so the Farm Bill is critical to the working poor. But what does it have to do with corporations that are not directly involved in food industry? Because SNAP supports millions of low wage workers working for Walmart, McDonald’s, Amazon and many others. 30% of Americans are working in jobs that barely lift a family above the poverty line, even if they were working full-time, year-round. SNAP also supports children who are their future employees! Research shows children who benefit from SNAP are likelier to have better health and educational outcomes as adults.

So what can you do about this? There has been a lot of support of the SNAP program from faith based groups (see Food Research & Action Center overview here). ICCR had a recent webinar where several faith groups and NGO’s described this urgent issue (recording here). The National Sustainable Agriculture Coalition website (here) provides a wealth of information on the farm bill process and actions you can take.

This may be crowded out of the headlines, but it is vitally important to us.

Investors call on Congress to reinstate TPS

Investors call on Congress to reinstate TPS

Chris Cox

The Interfaith Center for Corporate Responsibility, with signatures from SGI and 12 of its individual members, sent a letter to the leaders of Congress advocating for “Congress to allow TPS holders to remain in the country and pursue a path to naturalization.”

TPS, temporary protected status, established by Congress in the Immigration Act of 1990, is humanitarian program whose basic principle is that the United States should suspend deportations to countries that have been destabilized by war or catastrophe.

There are approximately 195,000 Salvadorans, 50,000 Haitians, and 2,550 Nicaraguans who are current beneficiaries of TPS status. In addition, there are 5,800 Syrian, 8,950 Nepali, and 57,000 Honduran TPS holders in the United States today. Of the total 10 countries with current TPS designations, approximately 330,000 people (or, adults and children) benefit from TPS. Many have resided in the U.S. for a significant period of time. For instance, more than one-half of El Salvadoran and Honduran, and 16 percent of the Haitian TPS beneficiaries have resided in the U.S. for 20 years or more.

Thanks to our members who individually signed on. May this week have fruitful in deliberations in the U.S. Senate. Again, to read the letter, please visit here.

Congress takes aim at shareholder rights

Congress takes aim at shareholder rights

Steve Herro

Frank Sherman, Associate Director Seventh Generation Interfaith

Many of the laws and regulations protecting the environment, consumer and worker rights, immigrants and minorities have been under attack of late. Now Congress is going after investor rights that have benefited investors, companies and society as a whole for nearly 80 years. Proposed legislation would prevent most investors from being able to file shareholder proposals with companies on key issues they want further action on, such as board governance matters, corporate policies or emerging risks like climate change. The shareholder proposal process is a critical tool in Seventh Generation Interfaith members’ ability to influence corporate behavior.

The Business Roundtable and the U.S. Chamber of Commerce have been lobbying for these changes for years. Among other changes, the minimum stock holdings would be increased from $2,000 in shares for one year to 1 percent of the company’s outstanding stock for three years in order to file resolutions. In effect, even the nation’s largest institutional investors, including the nation’s largest public pension funds, would not be able to file shareholder resolutions with companies.“The shareholder proposal language in the bill is clearly an overreach,” said Jonas Kron, Senior Vice President, Trillium Asset Management. “For example, raising the ownership requirement to 1% would leave only 11 investors with enough shares to file shareholder proposals at Wells Fargo. None of those investors have ever filed a shareholder proposal. In the mean time, smaller, but no less important, institutional investors in Wells Fargo have filed strongly supported proposals on a range of very important governance and management issues that should be raised with Wells Fargo management and directors.”

The amendment to the SEC rules, part of a larger bill (the Financial Choice Act, aimed at replacing the Dodd-Frank Act, has been proposed by House Financial Services Chairman Jeb Hensarling (R-Texas).  A hearing on the bill is scheduled for Wednesday, April 26.

Many of the country’s largest investors are registering strong opposition to the legislation.  A recent report published by Ceres in collaboration with ICCR and US SIF: The Forum for Sustainable and Responsible Investment, outlines numerous benefits investors have seen from the shareholder proxy tool, including inclusion of more independent board directors, stronger disclosure on political spending, widespread adoption of international human rights principles and wide-ranging actions to mitigate climate change risks. Last year, investors filed about 1,000 shareholder proposals with companies, including about 500 focused on corporate governance issues and more than 400 focused on environmental and social issues.

SGI lobbies Sen. Robert Portman to support a business supply transparency bill

Steve Herro

Seventh Generation Interfaith and Region VI (Cleveland, Ohio) have co-signed a letter to Sen. Robert Portman (Ohio), requesting his support of a business supply transparency bill for this Congress.  Portman is a key member of the Senate Finance Committee, likely starting point of such a bill.  The effort is an attempt to resurrect the The Business Supply Chain Transparency on Trafficking and Slavery Act of 2015 (H.R. 3226/S.1968); last session’s version garnered great support from numerous socially responsible investors.