SEC’s Closed Climate Probe Has Lessons for Asset Managers

Impact investment fund Engine No. 1 owned just a tiny slice of ExxonMobil in 2021 but still won three seats on Exxon’s board by arguing it needed a credible plan for the energy transition. BlackRock, Vanguard, and State Street backed some of its nominees. Afterward, the CEO of Ceres, a nonprofit that had rallied investor support, emailed BlackRock: “Your votes helped to change the course of history.”

That history just changed again.

The quoted email appears in a Report of Investigation the SEC released on October 7, under its Section 21(a) authority to publish an investigation’s results as guidance without bringing a case. The investigation examined whether members of Climate Action 100+ (CA100), a climate coalition Ceres helps run, acted together in the Exxon contest in ways that triggered disclosure obligations. The SEC found no violations. Still, it expressed “serious concerns,” and according to Reuters, wants large investors to review their reporting obligations before the 2027 proxy season.

CA100 launched in 2017 to press greenhouse gas emitters on climate governance, emissions, and disclosure. Its members (mostly pension funds and asset managers) commit to engage with a list of target companies, and CA100 “flagged” votes it considered important. In April 2021, CA100 changed its rules so it could identify director elections, then flagged the Exxon contest.

The legal question is whether CA100 members became a “group.” Under Section 13(d), investors who together own more than 5% of a company’s stock and agree to act together in voting must file a Schedule 13D disclosing their holdings and plans. An agreement need not be explicit. According to the report, coordinated voting following a coalition’s identification of a particular election, together with efforts to influence other members’ votes, could provide circumstantial evidence of an agreement. Independent parallel voting, by itself, does not create a group, and BlackRock said when it joined that it kept sole discretion over its votes. But according to the report, a disclaimer like that counts only if conduct matches it.

Independent of the “group” question, the report also raises questions about the continued availability of Schedule 13G reporting for certain institutional investors. They own more than 5% of many large companies and report those stakes on Schedule 13G, a short form open only to investors with no intent to change or influence control of an issuer. The SEC says joining a coalition like CA100 that targets specific policies at specific companies can jeopardize that eligibility. An investor that no longer qualifies to report on Schedule 13G may instead be required to file Schedule 13D, which means more extensive disclosure obligations.

For the 2027 proxy season, expect institutional investors to be more careful about what they say and to whom. Jim Moloney, director of the SEC’s Division of Corporation Finance, said the report addresses organized efforts that follow “a playbook similar to that of Climate Action 100+.” Cooley notes that it also pulls against SEC staff guidance from September, which said a 13G filer does not lose eligibility simply by joining discussions a company requests about upcoming votes. Engagement meetings may get more guarded even when companies initiate them.

According to Cooley, proxy advisers could be next. A December 2025 executive order directed the SEC to examine whether firms like ISS and Glass Lewis, which recommend how institutional investors should vote, can turn their clients into a group. The SEC is already in court seeking ISS voting data. The CA100 report gives the Commission a framework if it decides to look.

For asset managers, the lesson is that shareholder engagement and coordinated voting are not necessarily the same thing in the eyes of regulators. Firms participating in investor coalitions should be prepared to demonstrate that their voting decisions remain independent and that their activities are consistent with their beneficial ownership reporting obligations. The SEC may have closed its investigation without charges, but the questions it raised about investor coordination are far from settled.

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