NIRI is dedicated to advancing the practice of investor relations and professional competency and stature of its members. In its role as advocate for the IR profession and public companies more broadly, NIRI supports a variety of financial regulatory reforms. Here is NIRI’s current advocacy agenda:
Improving equity ownership transparency.
Section 13(f) of the Exchange Act, a provision adopted in 1975 prevents public companies and the marketplace from having timely information about the holdings of large investment managers.
- NIRI advocates for: Congressional legislation authorizing the SEC to move from quarterly disclosures to monthly disclosures and shortening the reporting deadline from 45 days to a more reasonable requirement.
- Join in supporting the SEC rulemaking proposal to improve investor ownership transparency submitted by NIRI, the Society for Corporate Governance and the NYSE. This proposal would reduce the quarterly Section 13(f) disclosure period from 45 calendar days to five business days. NIRI requests public companies join in supporting this proposal and has made available a downloadable support letter template that can be tailored for each company. Submit comment letters via email to “rule-comments@sec.gov” and include “File No. 4-825” in the subject line.
Supporting legislation requiring the SEC to create a Public Company Advisory Committee.
The SEC uses industry advisory committees to provide diverse perspectives, advice, and recommendations regarding its rules, regulations, and policies affecting SEC registrants and other capital market participants. These advisory committees include institutional investors, asset managers, fixed income managers, and small businesses.
- NIRI believes: The SEC would benefit from issuer input on a range of issues and supports creating an SEC Public Company Advisory Committee. Public companies play a fundamental role in the capital markets but appear to be the only SEC registrant of significance without such a committee. In July 2023, Congressman Frank Lucas (R-OK) introduced a bill to establish this committee, H.R. 4652: https://www.congress.gov/118/bills/hr4652/BILLS-118hr4652ih.pdf
Streamlining the SEC proposed rule that would require companies to report on climate-related mitigation activities.
The “one-size-fits-all” disclosure regime the SEC proposes overlooks the fact that climate change risks and impacts differ significantly among companies and depend largely on their business or industry sector.
- NIRI believes: The SEC should not mandate climate change disclosures unless such disclosures involve material climate-related risks and impacts.
Scope 3 disclosures should remain voluntary, as well as the attestation of Scope 1 and Scope 2 emissions data. Scope 3 emissions are principally societal and economy-wide emissions. Calculating these emissions will be especially challenging because they are beyond the carbon footprint and the control of a public company. Calculations of these emissions are also subject to different methodologies, subjective judgments, and widespread inaccuracies.
Under the SEC’s proposal, companies that are not large accelerated or accelerated filers are permitted to engage a third-party service provider voluntarily to attest or verify their Scope 1 and Scope 2 emissions data. In its explanation, the SEC concedes that “GHG emissions reporting and assurance landscapes are evolving.”
- NIRI believes: It is premature to require all companies to engage in third-party attestation of Scope 1 and Scope 2 emissions disclosures.
- NIRI recommends: The SEC should expand its voluntary attestation proposal to all public companies, including large accelerated and accelerated filers.
- In June 2022, NIRI submitted its comment letter outlining our position: https://www.sec.gov/comments/s7-10-22/s71022-20132552-303094.pdf
Modernizing and streamlining corporate disclosure rules.
- NIRI encourages: The SEC to use its regulatory authority to reduce the costs and burdens on issuers of complying with existing mandates, and the removal of requirements that are obsolete or do not generate material information for investors.
Improving transparency and requiring greater regulatory oversight of proxy advisory firms.
NIRI was extremely disappointed in the abrogation of the 2022 Final Rule regarding proxy advisory firms so soon after that rule was promulgated.
- NIRI supports: The draft review process that was proposed in the 2019 Proposed Rule, which can operate very efficiently and does not impact the independence of a proxy advisory firm, as each firm retains its exclusive right to determine whether to make any changes to a company report before disseminating it to its clients.
- NIRI also supports: Regulation or guidance regarding the practice of investment managers engaging in automated voting (“robo-voting”), in which they outsource voting decisions to the two largest proxy advisory firms. Proxy advisory firms should not be permitted to offer an automated voting service that allows the proxy firm to make and execute voting decisions on behalf of registered investment advisers without any ongoing oversight by these clients, except for the approval of general guidelines and policies before proxy season begins.
Modernizing the U.S. proxy system to improve engagement between public companies and shareholders.
The current shareholder voting and communications system is more than 30 years old and needs to be updated and reformed. Public companies are not able to use modern technology to communicate directly with individual investors who own their shares. More than 75% of the shares of U.S. public companies are held in “street name,” meaning that they are held in the name of a third-party financial intermediary, such as a broker or a bank. This system ensures an efficient transfer of shares among owners and promotes liquidity in our capital markets but complicates the efforts of companies to communicate with their shareholders.
- NIRI believes: The SEC should conduct a review of the “Non-Objecting Beneficial Owner” (NOBO) and “Objecting Beneficial Owner” (OBO) classification system and propose regulatory changes to improve communications between public companies and their shareholders. Public companies should have access to contact information for their beneficial owners and should be permitted to communicate with them directly.
Note: NIRI’s advocacy success depends on many factors including, for example, who holds office, the macro environment, support from our members and others, etc. As a result, these topics are not listed in order of priority.