# Understanding the "No ESG Act" of 2023

This bill is about what happens when shareholders try to push companies to make changes through voting. Here's the basic situation: when you own stock in a company, you get to vote on certain proposals at shareholder meetings. Activist investors and groups often submit proposals asking companies to do things like improve environmental practices, increase diversity, or change executive compensation policies. This bill would make it easier for companies to reject these proposals and keep them off the ballot.

Specifically, the bill allows companies to exclude shareholder proposals in three situations. First, if a company has already implemented policies that address what the proposal is asking for, they can skip it. Second, if another shareholder already submitted essentially the same proposal, the company can exclude the duplicate. Third, and most importantly, if a similar proposal was voted on in the past five years and didn't get enough support, the company can exclude it again. The threshold depends on how many times it's been voted on before—if it got less than 10 percent support once, less than 20 percent if voted on twice, or less than 40 percent if voted on three or more times, the company can block it from being voted on again.

The bill also prevents the Securities and Exchange Commission (the federal agency that oversees stock markets) from creating new rules that would make it harder for companies to exclude these proposals. Supporters argue this prevents repetitive voting and saves companies money on administrative costs. Critics worry it makes it harder for shareholders to push companies on environmental, social, and governance issues—often called ESG concerns—since rejected proposals would have a harder time getting another chance at a vote, even if shareholder interest grows over time.

No Expensive, Stifling Governance Act of 2023

Houchin, Erin

<html><body>No Expensive, Stifling Governance Act of 2023 or the No ESG Act of 2023 This bill allows an issuer of securities to exclude a shareholder proposal from its proxy materials if that proposal (1) has been substantially implemented by the issuer through policies, practices, or procedures; (2) duplicates another proposal contained in the proxy materials; or (3) addresses the same subject matter as a previously offered proposal. The bill provides time frames and voting percentages for the previously offered proposal that, if applicable, allow an issuer to exclude the new shareholder proposal. The bill also prohibits the Securities and Exchange Commission from implementing a proposed rule published on July 27, 2022, titled Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals under Exchange Act Rule 14a—8, which addresses the exclusion of shareholder proposals. </body></html>