recommended is very similar to the review and comment process used for many years by Insti- tutional Shareholder Services (ISS) in the United States. And it is a draft review process ISS still uses in other global markets to ensure accuracy of its company reports. Te U.S. Chamber of Commerce and the National


Association of Manufacturers are challenging this 2022 Final Rule in two different federal courts. Ad- ditionally, NIRI is working with leaders of the House Financial Services Committee to develop legislation to address the most pressing regulatory issues involv- ing proxy advisory firms. In its current form, this legislative proposal would:


(1) restore the draft review process for public company reports; (2) require more transparency by proxy firms about their internal methodologies and decision- making processes; and (3) address the problems caused by the “robo-voting” practices of ISS and Glass Lewis, in which certain smaller investment advisers outsource their proxy voting decisions to these firms.


Section 13(f) Reform Legislation A high priority for NIRI and its allies for more than a decade has been the need to modernize Section 13(f) of the Securities Exchange Act of 1934. In the last Congress, the then-Chair of the House


Financial Services Committee, Rep. Maxine Waters (D-CA), introduced H.R. 4618, a Section 13(f) reform bill that was approved by the Committee in July 2021. Tis bill—which was written by NIRI—authorized the SEC to move from quarterly disclosures to monthly disclosures and it shortened the filing deadline from 45 days to a more reasonable requirement. The Waters bill also contained two additional


provisions: (1) it required the disclosure of certain derivative products used to hide an economic interest in a company by a third-party; and (2) it directed the SEC to develop more transparent standards for confi- dential treatment requests by investment managers. With a new Congress in place, NIRI is working with the Republican staff on the House Financial Services Committee to develop a Section 13(f) modernization bill that can attract bipartisan support. Additionally, NIRI is working with the Society for Corporate Governance on a Petition for Rulemaking, to


niri.org/ irupdate


argue to the SEC that it should use its authority to shrink the 45-day reporting deadline to five business days. Tis would conform Section 13(f) reporting to the same reporting deadline for disclosures under Section 13(d).


Climate Change Disclosure Rules Te SEC continues to delay the issuance of a Final Rule on climate change disclosures. Te Rule was slated to be issued before December 31, 2023 and it now appears that the issuance will be sometime in the first quarter of 2024. At a recent public forum sponsored by the U.S.


Chamber of Commerce, SEC Chair Gary Gensler made the following comments about this rulemaking: He emphasized the importance of materiality in


corporate disclosures and stated that the standard would continue to be interpreted by the SEC as it has been defined by the U.S. Supreme Court. He noted that there was significant opposition to


the Scope 3 reporting requirement proposed by the SEC and stated that the Commission does not seek to regulate private companies that are in a public company’s supply chain (i.e., those that would be asked to provide emissions information to public companies in a Scope 3 requirement). Chair Gensler stated several times that he wants


to stay within the scope of the SEC’s statutory au- thority in promulgating a Final Rule, and he wants to mitigate the risk of litigation on the issue of the Commission’s authority. Finally, he noted that the compliance deadlines


for climate disclosures would be adjusted from the Proposed Rule. He indicated that any Final Rule is- sued in 2024 would not require reporting until after a full calendar year has passed.


Conclusion 2024 is sure to be a busy year, and we will provide NIRI members with updates on any significant de- velopments on these issues. You can see NIRI’s cur- rent Advocacy Agenda on the NIRI website, and feel free to email me with comments, questions, and feedback. IR


Niels Holch leads the NIRI advocacy program. nholch@holcherickson.com.


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