SEC: Tesla can’t dodge activist shareholder proposal on deep-sea mining

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The US Securities and Exchange Commission has cleared the way for an activist proposal on sea-floor mining to be considered at Tesla’s upcoming annual general meeting.

The SEC rejected a request from Tesla to omit the shareholder proposal on sourcing material from deep-sea mining from its AGM. That means the proposal will be included on the ballot at the US electric vehicle maker’s May 16 meeting.

Filed by activist investor and non-profit As You Sow, the proposal asks the company to commit to a deep-sea mining moratorium. The organization says such a stance is consistent with the principles in the Business Statement Supporting a Moratorium on Deep Sea Mining. The statement has been signed by a coalition of businesses, including automakers BMW, Volvo and Volkswagen; tech companies such as Google and Samsung SDI; a number of financial institutions; and NGOs such as Greenpeace.

If Tesla does not make a similar commitment, As You Sow has asked its board to 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,” reads a supporting statement by As You Sow.

Tesla had previously asked the SEC to omit the proposal, arguing it deals with matters relating to the company’s ordinary business operations, such as its selection of suppliers and source of raw materials. It argued that matters essential to run the company day to day can’t be subject to direct shareholder 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,” Tesla said in a statement.

However, the SEC did not agree with Tesla’s arguments, stating, “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