Regulatory and Legal Reform

The House Financial Services Committee has spent the last month holding hearings about environmental, social and governance policies that impact American businesses—and the NAM has been fighting for manufacturers every step of the way. This week, the committee held a markup to pass a package of legislation on the topic, and the NAM’s priorities were front and center.

The issue: Manufacturers in the U.S. are at the forefront of climate stewardship and innovation even as they power the U.S. economy, yet politically motivated activists and proxy advisory firms are making it difficult for manufacturers to succeed.

• Recent actions from the U.S. Securities and Exchange Commission have empowered these groups. From unworkable ESG disclosure mandates to new standards encouraging shareholder activism to a lack of oversight of proxy firms, manufacturers are getting squeezed.

NAM in action: The NAM has advocated aggressively on behalf of manufacturers, pressing Congress to curb the impact of activists, proxy firms and the SEC on public company governance.

• NAM President and CEO Jay Timmons urged Congress to make changes that would protect manufacturers and Main Street investors, while NAM Managing Vice President of Policy Chris Netram testified before the Financial Services Committee about the need for action.

• “Congress must step in to depoliticize the business decisions that impact the lives and life savings of millions of Americans,” said Timmons. “Manufacturers are determined to create jobs, lead the economy and improve the quality of life for all Americans. We are counting on [Congress’] leadership to counter the SEC’s regulatory overreach and help us achieve these goals.”

The result: The House committee has embraced the NAM’s proposed reforms, a huge victory for manufacturers across the United States. The legislation approved by the committee this week would:

• Prevent activists from hijacking the proxy ballot in pursuit of agendas unrelated to long-term business growth and shareholder value creation;
• Rein in proxy advisory firms and limit their outsized influence on corporate governance;
• Reinforce asset managers’ fiduciary duty to Main Street investors and retirees; and
• Ease ESG disclosure mandates by requiring that public companies only report information that is material to their shareholders.

The last word: “Manufacturers strongly support the Financial Services Committee’s efforts to rein in the SEC’s regulatory overreach, keep activists out of the boardroom and protect Americans’ investments in manufacturing growth,” Netram said prior to the committee’s markup. “[W]e look forward to working with [Congress] to ensure that manufacturers can continue to drive economic expansion in the U.S. and support American competitiveness on the world stage.”