Hunton Retail Law Resource

Recently, the Securities and Exchange Commission (“SEC”) allowed Apple Inc. to exclude a shareholder proposal from its proxy statement that requested that Apple “produce a report assessing the climate benefits and feasibility of adopting store-wide requirements for having all retail locations implement a policy on keeping entrance doors closed when climate control (especially air-conditioning during warm months) is in use.” 

The shareholder proponent, Sustainvest Asset Management LLC, claimed that retailers can combat climate change by adopting such energy-efficient policies. Under SEC rules, any shareholder who has continuously held at least $2,000 in market value or one percent of a public company’s common stock for at least one year can submit a proposal, subject to certain exceptions and exclusions.

Apple requested a no-action determination from the SEC under Rule 14a-8(i)(10) of the Securities Exchange Act of 1934, which allows a company to exclude a shareholder proposal if the company has already “substantially implemented” the proposal. Apple explained that it already has a written “Store Environment Policy” that requires all customer entrances in its retail locations that open directly to the outside to remain closed at all times, regardless of whether air-conditioning is in use or not. Thus, Apple said the policy rendered the proposal moot because it was unnecessary to prepare the requested study. The SEC agreed.

This proposal shows the extent to which some shareholders attempt to micromanage business activities through the shareholder approval process. But it also shows how environmental activists can target retailers in particular. Companies can be proactive in this area by revisiting their energy usage and efficiency policies as investors are increasingly examining corporate sustainability initiatives.