Changes to how the SEC regulates shareholder-sponsored proposals and communications, as well as Environmental, Social, and Governance (ESG) disclosure guidance are expected in 2022. These changes, if all fully implemented, could dramatically affect companies’ disclosures and investor interactions.

Taken together, these shifts may embolden investors and require companies to disclose more information on ESG issues, including those they may not yet have tackled such as the impact of, or contribution to, climate change. Regardless of the state of a company’s ESG maturity or the composition of its shareholder base, every company should evaluate how these changes may impact stakeholder and market perception of them.

Changes to SEC operational rules

Staff Legal Bulletin 14L

Following the unprecedented passage rate of environmental and social shareholder proposals during the 2021 proxy season, in November, 2021 the SEC released Staff Legal Bulletin 14L. In its announcement release, the Commission noted that shareholder proposals may, under this new guidance, survive the no-action process if the issue has broad societal impact, such that it transcends the ordinary business of the company and that proposals seeking more specific detail, timeframes, or action may “not per se constitute micromanagement” (SLB 14L). Going forward, companies seeking no-action relief are likely to find excluding environmental and social proposals may become more difficult, as the bulletin rescinded the previously accepted economic relevance threshold and micromanagement argument (SLB 14L).

As the 2022 proxy season unfolds, we have noted that many proposals filed this season (which, to be clear were formulated before the release of SLB 14L) include more prescriptive elements than prior seasons. For example, recent climate-related proposals specify implementation of science-based targets; similarly, political spending proposals that address the activities of specific trade associations. We expect that proponents may “test the waters” further in future proposals submitted to companies with annual meetings later in 2022.

Universal Proxy

Following the release of Staff Bulletin No. 14L, the SEC also issued its much-anticipated rulemaking on the use of universal proxies in contested elections. Specifically, for contested director elections that take place from August 1, 2022 onwards, both the management- and the dissident-proposed slates of directors will be listed as voting options on the same proxy card. Although this may mean that activists have more success with short-slate contests, the ability to choose candidates from both management and dissident slates may provide some benefit to companies in control contests, where previously shareholders were forced to choose a slate.


Changes to Rule14a-8
SEC Oversight Changes 2021 AGM 2022 AGM
SLB14 Changes
  • Proposal was likely not admissible if it related to broader societal impacts not directly related to the company.
  • Proposal could be excludable if the proposal was deemed to be overly prescriptive (i.e, micromanagement of directors)
  • Proposal could be excludable if it related to 5% or less of business revenue.
  • Proposals can be filed based on broader societal impact
  • Not excludable if perceived as too prescriptive if related to broader impact societal issues.
  • Not excludable based on economic viability test.
Universal Proxy Changes
  • Dissident candidates and director candidates on different information sent to investors for contested elections.
  • Integrated proxy information places dissident candidates alongside management candidates for dissident elections.

Expanding corporate ESG reporting

Expanding corporate ESG reporting

The evolving nature of anticipated rulemaking from the SEC on three additional topics is adding another topic to Corporate Secretaries’ and Investor Relations’ 2022 agendas. The three topics are climate, human capital management and cybersecurity. These anticipated changes may signal a shift in how companies will be required to address issues often previously deemed immaterial for SEC reporting purposes. While rules have not yet been proposed, it is widely expected that changes will expand reporting obligations on all three topics.

1) Climate Disclosure:

In December 2021, Chairman Gensler reaffirmed that climate disclosure is likely to become mandatory for all US public companies and may be expected to appear alongside, or incorporated into, company 10-K reporting. Reporting may require coverage of qualitative factors, such as how climate change affects a company's strategy, as well as quantitative factors, such as the financial impact of climate change or the amount of greenhouse gas that a company emits. A company’s contribution to, or impact from, climate change within its distinct sector, and its market capitalization, may inform what disclosure is required.

Chairman Gensler has given clear indication that the SEC expects any company that commits to a decarbonization plan to provide details and documented measurement to ensure such claims can be scrutinized and validated by investors and regulators.

While much is still unknown, the SEC has indicated it will take guidance from the Task-Force on Climate-related Financial Disclosure (TCFD), a reporting framework endorsed by the US Government during the 2021 G7 Leaders’ Summit. In preparing for forthcoming rulemaking, the TCFD framework can be a helpful guide for companies; investors have widely endorsed this framework and are using it to inform their own views and voting decisions on climate-related matters regardless of what is legally mandated.

2) Human Capital Management

The SEC has indicated that proposed rulemaking on human capital management will build on the existing principles-based rule to include some workforce metrics. While the principles-based rule focused on disclosure of human-capital matters that might pose a material risk to a business, the metric-focused rule will require disclosure of specific human capital factors. Additional guidance is likely forthcoming; topics relating to workforce composition, workforce turnover rates, and diversity of the workforce are under consideration.

3) Cybersecurity

The SEC previously issued guidance on cybersecurity risk in 2018. Forthcoming rulemaking will likely codify specific requirements intended to provide investors with a clearer understanding of what information companies should disclose relative to their cybersecurity risks. Commentators are optimistic the SEC will further clarify the terms “timely” and “material,” two critical criteria for assessing cybersecurity disclosure where existing guidance leaves open to company interpretation. The extent to which cybersecurity poses a risk for an individual company depends on the extent to which their business relies on online transactions, how they collect and manage customer data, and how integrated technology is into their business process. The 2018 guidance from the SEC is a constructive starting point for companies who have yet to evaluate how it may affect their business.

Impact of Potential SEC Changes
Climate-related financial Disclosure Human Capital Management Disclosure Cybersecurity Disclosure
Possible Scope
  • Mandatory reporting that could sit alongside company financial reporting
  • Likely to include qualitative reporting
  • Likely to include quantitative reporting
  • May include industry-specific disclosure requirements for sectors with greater exposure
  • Line-item disclosure focused on specific workforce metrics
  • Standard workforce metrics disclosed for each filing company
  • Disclosures regarding cybersecurity risk, governance & any material impacts
Considerations that may be included (informed by statements made by SEC):

Elements covered by TCFD

  • Governance - management of climate-related risks and opportunities
  • Strategy – how climate impacts the core functions of the business.
  • Risk Management – approach to identify and mitigate climate-related risks
  • Metrics and Targets – Any targets or metrics used relating to climate.

Elements mentioned in SEC Commissioner Comments:

  • Workforce composition: # of fulltime, part-time and contingent workers
  • Workplace cost: wages, benefits, etc.
  • Workplace stability: turnover rates
  • Workforce diversity: gender and race/ethnicity at different levels of seniority.

2018 SEC cybersecurity Guidance included:

  • Criteria for determining materiality of an incident: nature, magnitude, & ramification
  • Policies and Procedures: risk management procedure
  • Board Oversight: Boards role (if any) in overseeing cybersecurity
Corporate functions likely impacted


  • Operations
  • Strategy


  • Finance
  • Compliance
  • Investor Relations


  • Human Resources
  • Strategy


  • Finance
  • Compliance
  • Investor Relations


  • IT Security
  • Operations


  • Finance
  • Compliance
  • Investor Relations

Implications of changes

The effect of these new rules will be dependent on a company’s sector, geography, and market position. Taken together, the changes are intended to address the increased scrutiny by regulators and investors on ESG issues they perceive as financially relevant for companies. Further, in order for companies to provide comprehensive disclosure, these topics will likely require increased collaboration between multiple corporate divisions. No single function within a company can manage the interconnected and dynamic issues these topics cover.

Over the next six months, the combination of recent and proposed changes outlined in this report may affect a large majority of US public companies. Each company must evaluate how the Commission’s efforts will affect them. As companies prepare for these pending changes in 2022 we suggest a few key steps they can take now:

  • Ensure the right internal stakeholders are involved: these new requirements may relate to information that was not previously managed or reported. Responding to requirements may require developing entirely new processes. Mapping out what stakeholders should be involved, in what way, and using what systems and processes is a critical early step.
  • Understand how your institutional shareholders prioritize ESG: Investors have demonstrated that they view ESG as an issue companies need to manage. However, each shareholder has their own priorities and approach for how they integrate ESG into decision-making. Having a clear picture for how your investors approach ESG is critical.
  • Conduct a peer assessment: Investors and external stakeholders regularly utilize peer comparisons to evaluate your firm, and ESG is no different. Understanding how you compare to peers, including assessing peer information related to TCFD, can help inform necessary improvements and help prioritize ESG activities.
  • Act now: Don’t wait for regulation to come into effect. Investors and other stakeholders will continue to advocate for corporate action and disclosure on ESG. Waiting and responding to regulation will place you in a position of constantly playing catchup.

Market and regulatory ESG expectations are adapting quickly. Much remains unknown and companies may not be fully equipped with the resources or knowledge they need to monitor and adapt to the impending changes. Tracking the relevant market developments over 2022 and beyond is critical for every US company. Directors should think holistically about how ESG issues integrate across the company. Otherwise, they may find themselves playing an endless game of whack-a-mole, responding to changing expectations in an inefficient way that in the long-term requires more resources to be less effective.