The U.S. Securities and Exchange Commission (SEC) has issued a warning to asset managers and activist investors regarding their shareholder reporting obligations following an investigation into a 2021 campaign aimed at reshaping Exxon Mobil Corp’s board over climate-related concerns. This investor-led effort, which sought to hold the oil giant accountable for its environmental practices, ultimately resulted in changes to the company’s board.
Announcing its findings, the SEC said it examined the activities of Climate Action 100+, a group of investors advocating for improved corporate climate practices, but decided not to pursue enforcement action against its members. Nevertheless, the agency expressed “serious concerns” about the conduct of the group and other participants involved in the campaign.
The SEC’s guidance underscores that investors holding more than 5% of a public company’s shares must disclose their intentions and relevant information if they aim to influence or seek control over the company. The regulator emphasized that while shareholders have the right to voice their views, compliance with existing disclosure rules is mandatory to ensure transparency.
In its inquiry, the SEC also examined whether Climate Action 100+ members exerted pressure on BlackRock Inc. and State Street Corp, two of Exxon’s largest investors, to support shareholder proposals backed by the group. The agency found no evidence that either BlackRock or State Street agreed to vote proxies in a predetermined manner or shared their proxy voting plans with Climate Action 100+ affiliates.
Climate Action 100+, supported by the nonprofit group Ceres, maintained that it has consistently operated within U.S. securities law and assists investors in evaluating climate risks in their portfolios. Michael Boudett, general counsel for Ceres, stated that engaging with companies on risk management and evaluating director performance is a longstanding and lawful aspect of responsible investing. He also highlighted that the SEC’s report did not find any legal violations by Climate Action 100+, Ceres, or any investors.
BlackRock, State Street, and Vanguard declined to comment on the investigation, while Exxon did not immediately respond to requests for comment.
This SEC action follows a December 2024 interim report from the Republican-led House Judiciary Committee, which criticized Climate Action 100+ as “a cartel” of financial firms and activists. The committee alleged evidence of collusion and anti-competitive practices aimed at imposing environmental, social, and governance (ESG) goals on U.S. corporations. Climate Action 100+ dismissed these claims as “completely false,” asserting the group neither controls shareholder voting outcomes nor has ever done so.
The SEC’s investigation and subsequent warning reflect a broader shift within the agency regarding shareholder votes and climate policy. SEC Chairman Paul Atkins has previously criticized shareholders he says use proxy votes to advance climate and social equity agendas, and President Donald Trump signed an executive order in 2025 to limit the influence of proxy advisory firms.
The SEC issued its caution and additional guidance before the upcoming 2027 proxy season through a rarely used instrument known as a “report of investigation.”