Interfaith Center on Corporate Responsibility v. Coleman

Interfaith Center on Corporate Responsibility, United Church Funds, and Ceres, Inc. filed a facial constitutional challenge to Senate Bill 183 (SB 183). SB 183 is a Kentucky law that imposes requirements for disclosures, notifications, and economic analyses on “proxy advisors” whose advice is inconsistent with the recommendations of the board of directors of a company. In addition, SB 183 imposes disclosure and notification requirements on proxy advice that is based on “nonpecuniary” concerns, which “includes but is not limited to an environmental, social, political, or ideological interest which does not have a direct and material connection to the financial risk or financial return of an investment.” The plaintiffs, who described themselves as “nonprofit organizations that, as part of their missions, partner with institutional investors to engage with companies to seek strong long-term financial performance,” asserted that SB 183 violated the First Amendment because it impermissibly discriminates based on the viewpoint and content of speech and also because it compels speech. The complaint also asserted that SB 183 was void for vagueness due to its lack of guidance regarding its scope, including because questions left to the Attorney General’s discretion included whether a “reasonable investor” would consider environmental, social, and governance interests such as climate change “important” in determining the financial risk or return of an investment. The plaintiffs requested declaratory relief, an injunction barring enforcement of the law, and attorney fees and costs.