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SEC shuns Tesla request to omit shareholder proposal on deep-sea mining

The US Securities and Exchange Commission rejected this week Tesla’s request to omit a shareholder proposal that sought to address the impacts of mining the seabed for the materials used to build its electric vehicle batteries.

The proposal, filed by As You Sow, asked the US automaker to commit to a deep-sea mining moratorium that is consistent with the principles announced in the Business Statement Supporting a Moratorium on Deep Sea Mining, which is drawn up by a coalition of businesses and NGOs such as Greenpeace.

In a supporting statement, the shareholder advocacy group added that, “If Tesla cannot so commit, shareholders request that the board disclose its rationale and assess the company’s anticipated need for deep-sea materials.”

“Unlike its peers, Tesla has not supported a moratorium, leaving shareholders concerned that the company is not addressing the serious reputational and regulatory risks of deep-sea mining. The supply of deep-sea minerals is also legally, technologically and financially insecure, making it expensive and risky for Tesla to incorporate deep-sea-sourced minerals into its supply chain,” it stated.

Tesla had previously sought no-action relief from the SEC for omitting the proposal under Rule 14a-8(i)(7), on the grounds that it “inextricably deals with matters relating to the company’s ordinary business operations.”

Tesla argued that “the proponent’s proposal implicates core matters involving the company’s business and operations – (i) the company’s selection of suppliers and (ii) the source and types of raw materials used in the company’s products.”

This, said the EV maker, is “fundamental to management’s ability to run the company on a day-to-day basis and therefore cannot, as a practical matter, be subject to direct stockholder oversight.”

“The proposal fails to present an issue of broad societal impact that transcends the matters of the company’s product offerings and its supplier relationships,” it added.

However, the SEC did not agree with Tesla’s arguments, stating that, “In our view, the proposal transcends ordinary business matters and does not seek to micromanage the company.”

Earlier this year, As You Sow also filed a proposal on the topic with General Motors. Unlike with Tesla, the GM proposal does not ask for a commitment to a moratorium, but rather a public disclosure on policies on the use of deep-sea-mined minerals in its production and supply chains.

The resolutions are part of the As You Sow’s biodiversity program, which the group says is a response to growing shareholder concern about “the systemic risks posed by biodiversity loss and looming ecosystem collapse.”

Read More: Deep-sea mining could cost $500 billion in value destruction, study says

Source: MINING.COM – Read More