Securities and Exchange Commission (SEC) Proposes Harmful Rule Changes

September 24, 2007

“… we suggest that the time has come for a "New American Experiment" -- to implement economic rights, to broaden the sharing of economic power, and to make economic decisions more accountable to the common good. This experiment can create new structures of economic partnership and participation within firms at the regional level, for the whole nation, and across borders.”

ECONOMIC JUSTICE FOR ALL, U.S. Catholic Bishops, 1986

The Interfaith Center on Corporate Responsibility (ICCR) and the Social Investment Forum (SIF) are requesting that groups and individuals who own stocks write to the SEC about proposed changes in regulations governing corporations’ relations with shareholders. These changes would limit the voice of shareholders in holding corporations accountable for their actions.

Send copies of letters to legislators, particularly those on committees overseeing the SEC:

U.S. Senate Financial Services Committee

U.S. House Energy and Commerce Committee

Or sign a prepared letter at: http://www.congressweb.com/cweb4/index.cfm?orgcode=hg&hotissue=1

Comments are welcome until the October 2.

BACKGROUND

ICCR and other groups that monitor the social justice and environmental records of corporations rely on shareholder resolutions to integrate social values into corporate and investor decisions.

Strategies include:

• dialogue with the company on the content of potential resolutions (25-35% of the resolutions are withdrawn when dialogue results in compromise)

• filing shareholder resolutions (While fewer than 20% of the companies face shareholder resolutions in a typical year, some countries regularly face resolutions due to problems with their environmental and labor practices.).

Each resolution requires approval by the SEC.

Resolutions include actions to curtail damage to the environment, protect the safety of workers, bring about transparency of procedures and respect for the rights of shareholders. For example, a current ICCR resolution calls on Coca-Cola to study the environmental impact of their water extraction from an area of India because of evidence that they are depleting and polluting local water sources.

ICCR and shareholder groups work to raise awareness of issues underlying a resolution, but it takes time for shareholders to grasp the impact of damaging actions. Therefore, the ability to bring up an issue more than once is critical.

SEC-PROPOSED RULE CHANGES

Companies that face frequent shareholder resolutions would prefer them to be outlawed. The SEC is proposing a change to allow companies to “opt-out” of entertaining non-binding resolutions. This “opt-out” would prohibit groups such as ICCR from raising shareholders’ awareness of ethical concerns

A second proposal would raise the percentage of votes required to return a non-binding resolution to the table.

A third limitation would prohibit nominations for Board of Director positions except from members of the current Board or from shareholders owning at least five percent of the company’s stock.

ACTION NEEDED

Write to Christopher Cox, Chairman of the Securities and Exchange Commission , 100 F Street NE , Washington DC 20549 .

TALKING POINTS

• Changes proposed for SEC Rule 14a-8 would limit the right of shareholders to sponsor advisory resolutions.

• The “op-out” would make it difficult for shareholder groups to communicate to other shareholders their concerns about a business practice.

• Raising the percentage of votes required to address a resolution more than one year would disallow education of shareholders on an issue.

• These rules changes are unnecessary. Few companies face non-binding shareholder resolutions.

• Shareholders should have the opportunity to nominate members to the Board of Directors.