The New Era of Sustainability Reporting: Global Landscape and Practical Lessons

ESG Reporting Landscape

The ESG reporting landscape is undergoing rapid transformation, with regulatory shifts, evolving standards, and new stakeholder expectations driving both opportunities and challenges for organizations worldwide.

The demand for consistent, comparable, and decision-useful sustainability information remains strong, driving voluntary standards toward greater harmonization and jurisdictions toward stronger mandatory frameworks.

Global Snapshot

United States

• Shift from voluntary to mandatory: While the previously adopted SEC climate disclosure rule has halted, regulations at the state level continue moving toward mandatory disclosures for climate-related risks and greenhouse gas (GHG) emissions with reporting in California beginning in January 2026.
• State-by-state action: In California, SB 253 and SB 261 mandate Scope 1, 2, and (over time) 3 GHG reporting, plus climate risk disclosure for companies with annual revenues in the state exceeding a set amount. Other states, including New York, New Jersey, Illinois, Washington, Colorado are following California’s lead by introducing similar climate-related active or pending legislation, with varied revenue thresholds and reporting timelines.

Practical focus for companies: Companies increasingly align with the ISSB and TCFD frameworks for climate and risk disclosures. Investor language is moving away from “ESG” toward “material sustainability risks and opportunities.

Canada

• Regulatory pause: Canadian Securities Administrators (CSA) have delayed implementing new mandatory climate-related disclosure rules as of April 2025, due to market uncertainty.
• ISSB-aligned standards: The Canadian Sustainability Standards Board (CSSB) released voluntary standards (CSDS 2, December 2024) with expectation of future mandatory adoption.

Practical focus for companies: Use the current “pause” to prepare, perform dry runs, and plan for rapid regulatory return. Reporting remains critical for market access and investor confidence.

European Union (EU)

• CSRD & ESRS changes: The Corporate Sustainability Reporting Directive (CSRD) expands detailed sustainability reporting—now being streamlined:
  • Omnibus Package (2025): Raises company size thresholds, reduces scope by up to 80%.
  • Timeline extended: Reporting delayed by two years for many, but “Wave 1” filers already issued first reports.
• Trends in reports: Key findings from preliminary reports published show that Reports vary widely in length and style but follow a relatively consistent ESRS-based structure, with comparability strong at a high level but weak at the datapoint level. Most companies focus on a few core topical standards—climate change, workforce, and governance—while rarely reporting on less material sub-topics.

Practical focus for companies: Early lessons encourage targeted materiality, through double materiality assessments, and robust stakeholder engagement with investors and across the entire value chain.

Other Notable Jurisdictions

New Zealand

Mandatory climate disclosure: Under the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021, listed issuers, large banks, insurers, and investment managers must disclose climate risks and opportunities in annual reports. Based on the NZ CS 1, CS 2, and CS 3 standards, which are closely aligned with TCFD and moving toward ISSB alignment, the purpose is to support capital allocation to low-emissions, climate-resilient activities and attract climate-aware global investors. 2024 marked the first year of reporting by issuers, but the External Reporting Board (XRB) is consulting on further timeline extensions for Scope 3 and financial impact disclosures.

Australia

AASB S2 incoming: The Australian Accounting Standards Board will require listed and large companies to disclose climate-related financial risks and GHG emissions (Scope 1, 2, and regulated Scope 3). The final AASB S2 standard is planned for application starting in 2026, following ISSB/TCFD structure.

Hong Kong

IFRS S1/S2 adoption: The HKEX (Hong Kong Exchanges and Clearing Limited) is set to adopt IFRS S2 for climate-related disclosures from January 2026. Listed entities must report on governance, strategy, risk management, metrics, and targets in line with international climate standards.

Mexico

Sustainability reporting development: As of 2025, the regulatory framework incorporates ISSB-based requirements and GHG emission disclosures for large entities and public companies. Mexico is developing these sustainability standards to increase international consistency, transparency, and market attractiveness.

Voluntary Standards and Framework Consolidation

The voluntary reporting space is also evolving, primarily under the purview of the International Sustainability Standards Board (ISSB). ISSB, under the IFRS Foundation, now provides a unified baseline, with widespread adoption supported by technical mapping and collaboration across standard setters.

Multiple frameworks, including SASB, CDSB, TCFD, and GRI are either consolidating under ISSB or collaborating with the organization to standardize reporting, promote interoperability of standards, and create a harmonized global approach. Industry initiatives, such as partnerships between the GHG Protocol and ISO, further demonstrate momentum toward simplified and streamlined emissions accounting, benefiting companies seeking efficiency and comparability across jurisdictions.

Key Trends and Reporting Strategies

With this evolving reporting landscape, organizations should consider several key trends when developing or adjusting their sustainability reporting approach:

• The need for quality data, strong governance, and clear materiality prioritization
• A growing shift in narrative, away from broad ESG terminology to focused discussions of specific material sustainability risks and opportunities
• A growing emphasis on making intentional, well-substantiated commitments and disclosures to enhance transparency, avoid greenwashing, and build stakeholder trust amid increased regulatory scrutiny in Canada and beyond
• Rising demand for machine-readable, structured, concise, and impactful sustainability reports, less check the-box, more targeted narratives plus infographics and clear metrics

Building Your Sustainability Reporting Approach

Understand Expectations or Requirements: With so many evolving standards, frameworks, and regulations, it can be challenging to know what to report, or what constitutes best practice. Companies should dedicate time upfront to identify required disclosures and determine internal goals for reporting, such as defining the target audience, purpose, and communication priorities. Clarity at this stage provides efficiency later, ensures compliance with mandatory requirements, and helps position the report as a meaningful tool rather than a compliance-only exercise.

Build Strong Engagement and Collaboration: It’s critical to understand the needs of stakeholders in order to address them. Effective sustainability reporting hinges on broad engagement across the organization and with external stakeholders. Engaging with your shareholders year-round, not just ahead of the annual meeting, is a meaningful way to gauge their priorities and expectations. The same goes for other external stakeholders, such as customers, who are increasingly seeking information around companies’ environmental and social practices. Internally, engaging cross-functional teams (finance, operations, HR, procurement) is paramount to successful and effective reporting.

Position Sustainability Reporting as Strategic Communication: Finally, while there are reporting regulations evolving globally and there is an element of compliance that has been introduced into reporting, companies should not let this alone drive their reporting approach. Investors, especially shareholders, want to see how sustainability aligns with overall corporate strategy and growth. Sustainability reporting should address key points around risk, opportunity, and long-term value creation. Just checking the box on reporting is not an effective use of your company’s time and is not effective in addressing the needs of stakeholders—use reporting as an opportunity to tell your company’s story.

Streamline Your Reporting with

Whether reporting is mandatory or voluntary, clear, intentional sustainability disclosures drive value creation, strengthen stakeholder trust, and position organizations for long-term success.

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• Facilitate cross-functional collaboration by centralizing reporting activities into a single platform, connecting finance, sustainability, operations, legal, and other teams for seamless engagement.
• Emphasize strategic communication of material risks, focused transparency, and credible disclosures to address investor expectations and avoid pitfalls such as greenwashing.

Start today to prepare for evolving regulatory requirements and investor expectations, ensuring your sustainability story is clear, credible, and effectively drives long-term value for your business and stakeholders.

Executive Summary

In 2025, Canada’s corporate governance landscape will be shaped by a combination of evolving disclosure frameworks, a tightening global regulatory environment, and the increasing influence of geopolitical and technological factors. Board diversity expectations, cyber risk oversight, and AI governance are rising as defining pillars of Canadian governance. While ISS and Glass Lewis only implemented slight policy revisions, investor scrutiny remains high across directorship standards, executive pay, and ESG oversight. Data from Diligent’s voting platform shows that remuneration proposals saw the widest variation in support, reflecting intensified investor focus on compensation governance. Meanwhile, the political divergence between the U.S. and Canada over DEI (Diversity, Equity, and Inclusion) policies has generated tension, especially for Canadian issuers with dual listings.

Further complexity has emerged from new SEC rules in the U.S., leading to more cautious engagement strategies by major investors. Meanwhile, Canada’s regulatory bodies, notably the OSC (Ontario Securities Commission) and CSA (Canadian Securities Administrators), are enhancing their commitment to transparency and board accountability, particularly on AI and sustainability matters. Notably, activism surged in Canada this year, with TD Bank’s AGM drawing national attention over governance failures linked to money laundering investigations. Overall, as 2025 unfolds, Canadian companies must balance a maturing principles-based governance regime with increasingly rule-driven global investor expectations.

AGM Voting Trends

Diligent’s aggregated voting data for 2025 paints a nuanced picture of investor sentiment across governance categories:

While director elections and committee-related proposals saw strong average support, low-end figures suggest isolated opposition to certain board members or audit practices. The remuneration category, however, displayed both the highest volatility and lowest minimum support, underlining investor concerns around pay-performance alignment and equity-based incentives.

Proxy Voting Guidance & AI Oversight

Glass Lewis and ISS released modest revisions to their 2025 Canadian proxy policies. Both emphasized the need for increased transparency in board oversight of emerging risks, particularly around AI and cyber governance. Glass Lewis introduced formal expectations for companies developing or using AI to disclose oversight structures, ethical frameworks, and board expertise in the area. It warned that directors could be held accountable where inadequate AI governance leads to shareholder harm.

ISS reaffirmed its stance on director independence, committee composition, and board refreshment, while flagging climate accountability and ESG-linked pay as growing areas of focus. While neither advisor introduced significant overhauls, the messaging was clear: scrutiny around board capabilities and ethical tech use is intensifying.

Political & Regulatory Context: DEI, Engagement & Diverging Jurisdictions

The U.S. political shift following President Trump’s return to office has cast a shadow on corporate governance norms in North America. His January 2025 executive order to dismantle DEI programs prompted ISS to suspend enforcement of board diversity guidelines for U.S. companies. Glass Lewis, conversely, upheld its DEI commitments. This divergence places Canadian companies with U.S. listings in a precarious position, as they face conflicting stewardship expectations.

Domestically, the CSA and OSC remain committed to progressive disclosure standards. Finalized diversity amendments are expected to mandate expanded reporting on board and executive composition, covering Indigenous peoples, racial minorities, and LGBTQ2SI+ groups. These reforms reflect a continuation of Canada’s principles-based, comply-or-explain approach.

New SEC rules enacted in February 2025 added further complexity. Under these changes, even passive investor communications may be construed as efforts to influence corporate control. This has led large institutional investors such as BlackRock and State Street to adopt a “listen-only” posture in engagements, effectively muting shareholder dialogue during the proxy season.

Shareholder Activism & Governance Flashpoints

Activist campaigns surged in Canada throughout 2025, with 49 tracked between January to mid-June 2025. The most high-profile case involved Toronto-Dominion Bank (TD). The bank’s AGM featured 11 shareholder proposals, many focusing on governance and oversight weaknesses stemming from ongoing anti-money laundering (AML) investigations. Investor concerns included board accountability, executive risk oversight, and transparency on regulatory compliance. The event has become a bellwether for broader governance expectations across the financial sector.

Elsewhere, the rise in activism reflects growing investor impatience with legacy board structures, insufficient ESG responsiveness, and inconsistent remuneration practices. Proxy advisors and institutional shareholders are placing greater emphasis on board effectiveness, risk oversight, and responsiveness to prior vote outcomes.

Conclusion

Canada enters the second half of 2025 with a strong, principles-based governance model, but one now navigating global crosswinds. Board diversity, ESG stewardship, cyber resilience, and AI governance have emerged as core focal points. While ISS and Glass Lewis continue to calibrate expectations, institutional investors are raising the bar. Companies must ensure they are not only compliant but genuinely responsive to shifting stakeholder concerns. Going into 2026, boards are encouraged to deepen expertise in ethical technology use, enhance disclosure practices, and align remuneration with both financial and non-financial metrics. In a world of regulatory fragmentation and rising activism, agility and transparency will define good governance.

Overview

In a year that opened with trade uncertainty, inflation jitters and market volatility, much of the dust has settled and given way to greater economic clarity, resilient earnings growth and record market highs.  The midpoint of the year is ushering in a new phase of economic transformation with the establishment of a stablecoin payment system under the GENIUS Act and a national discourse on the Federal Reserve System.

Underpinning this process has been a shift to a more business-friendly regulatory framework, which included the de-escalation of environmental, social and governance (ESG) agendas, particularly climate change and diversity, equity and inclusion (DEI) initiatives.  For companies, this resulted in fewer and less successful demands from ESG adherents during the 2025 proxy season, other than those relating to core corporate governance principles.

Some of the trends observed during this year’s annual meetings include the following:

• Scale-back of shareholder proposals: The volume of shareholder proposal filings through June (841) subsided substantially after reaching its highest level last year (1,034) since 2015 (see Tables 1 and 2).   Submissions of environmental and social (E&S) resolutions were down by nearly a quarter from last year’s peak as proponents awaited an expected course change by the incoming Trump administration and the GOP-led SEC.  Omissions also ran higher than last year–24% of all filings compared to 14% in 2024—due in part to new SEC guidance that facilitated the exclusion of proposals that focus on significant social policy issues.  Given the more favorable landscape for no-action challenges, filings of E&S resolutions are likely to remain suppressed going forward.
• More companies relented on governance measures: The volume of governance filings remained fairly constant from last year (302 versus 318 in 2024) due in large part to the persistence of corporate gadfly John Chevedden and his affiliates who sponsored over half of them.  Standard-themed governance measures amassed 45 majority votes and in nearly two dozen cases the boards chose not to oppose the resolutions.  Another 40 companies countered the shareholder resolutions with their own charter and bylaw amendments.
• E&S support contracted further: For a fourth consecutive year, support for E&S resolutions lost ground, not only from investors but also from proxy advisors, particularly Institutional Shareholder Services (ISS), which backed a mere 12% of them compared to over half in 2024 (see Table 3). Excluding proposals from conservative (“anti-ESG”) investors, which typically receive marginal support, average E&S votes reached only 14.8%, down from 19.7% in 2024.  Only 14 proposals attracted over 30% support, 11 of which were on political contributions including five majorities.
• ESG crossfire intensified: Conservative proponents produced 129 filings this season—up slightly from 120 in 2024—with over 80% devoted to social issues, particularly DEI themes.  Ten companies faced competing pro- and anti-ESG resolutions on DEI, climate change and plastics recycling.   Notwithstanding the high proposal volume, conservatives’ E&S initiatives continued to attract only marginal support—2.2% on average—though they recorded several standout votes on human rights due to rare support from the proxy advisors.
• Executive compensation and director approvals remained solid: Say on pay (SOP) voting patterns were essentially unchanged from the first half of 2024 in terms of average support (90.5%), the rate of failures (1.3%), and the proportion receiving a negative ISS recommendation (12.3%).  Directors also elicited strong support with 17% fewer facing high opposition votes (over 30%) than in the 2024 proxy season due in part to changes in investor policies on board diversity, overboarding and director accountability on E&S matters.  A number of hedge funds also shifted gears by passing on full-scale proxy fights in favor of “vote no” campaigns, which generated some headway on desired leadership changes.
• More competition in state migrations: Reincorporation activity became livelier with Delaware, Texas and Nevada vying for business by implementing major amendments to their respective corporation laws.  Although Nevada was the preferred destination for “DExits,” Texas made the most innovative changes to its statutes, including allowing companies to impose meaningful ownership requirements for shareholders to submit proposals and mandating a disclosure regime for proxy advisors when their voting advice on Texas companies is based on non-financial factors or conflicts with the board’s recommendations.

This report examines some of the predominant themes, voting results and trends at all U.S. public company annual meetings during the first half of 2025. Note that shareholder proposal votes are based on “for” and “against” votes and exclude abstentions.  Shareholder proposal submissions are estimates based on SEC filings, proponent websites and media reports.   Proxy advisor recommendations are derived from ISS Voting Analytics and Diligent Market Intelligence.

Table 1: Shareholder Proposal Voting Trends

*Of the 2025 majority votes, 22 governance proposals were not opposed by the board.
Of the 2024 majority votes, 15 of the governance proposals were not opposed by the board.
Of the 2023 majority votes, five of the governance proposals and one of the E&S proposals were not opposed by the board.

Table 2: Top Shareholder Proposal Filings: 2025 (as of June 30) – 2024 (full year)

*These proposals were filed by Chris Mueller and his affiliates regarding companies’ direct stock purchase plans offered through their transfer agent, Computershare. All were omitted or withdrawn due to company challenges on ordinary business or procedural defect grounds.

Table 3: ISS and Glass Lewis Support for Shareholder Proposals

Regulatory Backdrop

During its first six months, the Trump administration took swift action to revitalize and modernize the economy and position the U.S. as a leader in technological innovation which, by mid-July, culminated in “Crypto Week” legislation on Capitol Hill and the unveiling of an artificial intelligence (AI) action plan.¹2  These directives were backed up with enforcement actions, such as Federal Communications Commission (FCC) investigations into the DEI practices of several media and wireless companies, particularly those awaiting regulatory approval of mergers and acquisitions.

Other EOs reasserted American energy independence by removing impediments to domestic energy production and rolling back the Biden administration’s climate regulations, including withdrawing the U.S. from the Paris Agreement and other climate-related financial commitments.  A follow-on EO issued in April took aim at state-level climate laws and litigation designed to hold fossil fuel companies financially responsible for alleged harms caused by climate change.³  The SEC also signaled its probable intent to roll back the 2024 climate disclosure rules by ending it defense of them against legal challenges.

Other SEC actions had a direct bearing on the 2025 proxy season.  In February, the Division of Corporation Finance took immediate steps to restore balance to the no-action process and address longstanding complaints from issuers and institutional investors regarding the rising volume of shareholder proposals and the lower quality of many, including being overly prescriptive, substantially implemented or lacking economic merit.  New interpretative guidance—Staff Legal Bulletin (SLB) 14M—essentially rescinded Biden-era guidance (SLB 14L) that had made it harder for companies to exclude shareholder proposals that raised broad societal concerns.  The SEC additionally updated its guidance on Regulation 13D-G beneficial ownership reporting to discourage large investors from being coercive in their engagements

with issuers, such as conditioning their support of board nominees on companies adhering to their policies on governance, compensation and E&S matters.

The result was a noticeable retreat by investors and proxy advisors from advancing ESG agendas this season.  To avoid triggering Schedule 13D requirements, large asset managers shifted to engagement “lite” discussions, purged or softened references to DEI and ESG in their voting and stewardship guidelines, and limited their issuance of periodic vote bulletins during proxy season.  Meanwhile, the proxy advisors scrambled to adjust their quota-style board diversity policies: ISS suspended the application of its policy and Glass Lewis offered its clients an alternative to its benchmark policy that did not consider gender and underrepresented community diversity.

Going forward, federal and state lawmakers are turning more attention to the proxy advisory firms over their market power, conflicts of interest, foreign ownership, and lack of economic analysis underpinning their voting recommendations.⁴  To deflect this, Glass Lewis announced in May that it will encourage and assist its investor clients in creating their own proxy voting guidelines and, beginning in 2026, it will open its platform to third-party voting policies as alternatives to Glass Lewis’s policy options.

E&S Issues

E&S on the Downswing

Anticipating post-election policy changes, E&S proponents scaled back their proposal submissions by nearly a quarter to their pre-SLB 14L level: 468, down from 610 last year.

Even with the cutback, fewer than half of the E&S proposals filed reached ballots this season due to a high proportion of omissions: 21% compared to 8% in 2024.  While SLB 14M was a contributing factor, there had already been an increasing trend of ordinary business exclusions in recent years, which was the basis for 71% of the E&S omissions this year, compared to 68% in 2024.

The rate of confirmed withdrawals (24%) was generally consistent with last year, though in about half of the cases they occurred after the targeted companies sought no-action relief.  And unlike in past years, proponents have been more reticent about broadcasting the details of settlements reached with companies.

Investors’ support for E&S issues fell for a fourth consecutive year, reflecting shifts in their 2025 voting and stewardship policies deemphasizing ESG and DEI expectations.  Excluding conservative resolutions, which investors rarely endorse, average support fell to 14.8% from 19.7% in 2024 and a high of 39.5% in 2021.  Only 14 E&S proposals (6% of those voted) generated over 30% support, compared to 56 last year (15% of those voted).  Proposals on political spending disclosure—largely sponsored by Chevedden—were the silver lining, delivering five majority votes and another six achieving 30-50% support.

A more striking development was the loss of proxy advisor support for many of this year’s E&S efforts.   Excluding proposals from conservatives, Glass Lewis’s backing dipped to 32% from 41% in 2024, while ISS’s support plunged to 12% from 55% in 2024.  Notably, ISS did not support any environmental resolutions this year and it largely stayed sidelined on the DEI proposals.

Conservatives Keep up the Pressure

Unlike their liberal counterparts, conservative proponents increased their share of filings, which stood at 129 by mid-year, up from 120 in 2024, and accounted for 24% of all E&S submissions, compared to 18% last year.  In addition to seasoned activists, such as the National Legal and Policy Center (NLPC) and National Center for Public Policy Research (NCPPR), their ranks expanded to include the Heritage Foundation, GuideStone Capital Management, the Catholic Diocese of Fort Worth, Investing with Purpose Capital, and the Oklahoma Tobacco Settlement Fund.

Over 80% of conservative proposals focused on social issues with one-third directed at corporate DEI programs and policies.  Despite the high proposal volume, their E&S initiatives continued to attract only marginal support—2.2% on average—though they recorded several standout votes on human rights due to rare support from the proxy advisors.

Ten companies faced competing pro- and anti-ESG resolutions, primarily on DEI, but also on carbon reduction goals and plastics recycling.  Walmart navigated this by writing one rebuttal for both proposals in order to avoid taking sides on sensitive and polarizing issues.

DEI and Discrimination

DEI has been one of the most challenging issues confronting companies this spring in view of the 2023 U.S. Supreme Court decision in Students for Fair Admissions v. Harvard, Robby Starbuck’s 2024 social media campaign and President Trump’s EOs.

The result has been extensive rollbacks of corporate DEI policies and programs, particularly by federal contractors and companies in highly regulated industries.  According to a Gravity Research study, the most significant changes have been around hiring and representation goals, along with a recasting of “DEI” into more innocuous terms, such as “inclusion and belonging.”  Companies have also scrubbed mentions of DEI from corporate reports, regulatory filings and websites.

Although this year’s DEI proposal submissions predated the Trump administration’s directives, the impact of the EOs was seen in a shift by investors and proxy advisors towards more neutral positions.  There was also a surge in resolutions from conservative proponents, leading to pro- and anti-DEI face-offs at six companies’ annual meetings.

Pro-DEI

For the most part, pro-DEI proponents resumed their longstanding proposals calling for racial equity/civil rights audits, disclosure of EEO-1 data, and reports on the effectiveness of companies’ DEI efforts.

The latter type of proposal—primarily sponsored by As You Sow–has been the most popular over the past three years with many getting withdrawn, typically if the company agrees to disclosure outcome statistics, such as workforce hiring, promotion and retention data by gender, race and ethnicity.  However, the six voted this season saw a substantial decline in investor support, averaging 12.8% compared to 23.2% in 2024, with the lowest votes occurring on repeat proposals at International Paper and Lennar that were specific to LGBTQIA+ equity and inclusion efforts.   ISS declined to back any of the resolutions, despite supporting 85% of them last year, while Glass Lewis endorsed about half of them.

In contrast, support for racial equity/civil rights audits held up from last year, averaging 13.9%, with the highest vote appearing early in the season at Deere (29.5%)–the only one backed by ISS. This year’s collection also included a new variation by Chevedden, which specified that the audit adhere to the Civil Rights Audit Standards developed by PolicyLink in conjunction with a group of corporate executives, investors, union and worker representatives and civil rights experts.⁵

Only a handful of resolutions were directed at companies that walked back some of their DEI commitments in 2024, specifically, to report on the research and analysis the board undertook before taking such action.  Two were omitted as ordinary business by Harley-Davidson and Tractor Supply and one was withdrawn at Ford Motor.

Anti-DEI

Leveraging the momentum from Starbuck’s campaign, conservatives ramped up their requests for companies to address the legal and reputational risks of maintaining their DEI or affirmative action programs including potential discrimination against “non-diverse” employees and vendors. For the first time, they also took a more direct approach by asking nearly a dozen companies to consider abolishing their DEI efforts or to cease participating in the Human Rights Campaign’s Corporate Equality Index (CEI), which rates companies on LBGTQ+ workplace equality.

Another new angle from Bowyer Research took issue with four companies’ lack of faith-based employee resource groups (ERGs), despite recognizing ERGs formed around race, gender identity, military status and other criteria.  Department of Justice (DOJ) and Equal Employment Opportunity Commission (EEOC) guidance on the DEI-related EOs emphasized that limiting membership in ERGs or affinity groups only to employees of a certain gender, race or ethnicity may constitute unlawful segregation.⁶  According to Gravity Research’s study, companies are addressing this by opening their ERGs to all employees and aligning them with business priorities, such as professional development and networking.

Voting outcomes across the 23 proposals failed to pick up steam from last year, receiving an average of 1.6% support. The one standout was a proposal on affirmative action risk at Target, which received 7.2% and the backing of Glass Lewis.

Conservatives additionally carried over the theme of religious discrimination to 14 newly formulated resolutions on charitable giving.  Whereas their prior proposals sought disclosure of recipients above certain donation amounts, the 2025 iterations dealt with companies’ charitable partnerships—particularly with organizations that have maligned and suppressed conservative political and religious views–and the exclusion of religious charities from companies’ employer gift-match programs.  The new versions were less well-received by investors, averaging 1.2% compared to 2.9% in 2024 and a high of 7.1% in 2023.

Competing Pro- and Anti-DEI Proposals

Key Diversity and Discrimination Proposals

Climate Change

The Trump administration’s EOs and potential pullback from the climate disclosure rules reflect longstanding efforts by Republican state attorneys general (AGs) and Congressional lawmakers to protect American energy, particularly against boycotts and the defunding of fossil fuel companies.  Since 2022, major U.S. banks and asset managers have been pulling out of global climate collaborations, including Climate Action 100+, the Net Zero Banking Alliance (NZBA) and the Net Zero Asset Managers Initiative (NZAM), over anti-trust investigations.  In May, the DOJ and Federal Trade Commission (FTC) filed a statement of interest supporting an anti-trust and consumer protection lawsuit brought by 11 state AGs alleging that BlackRock, State Street and Vanguard Group used their common shareholdings and commitments in industry-wide climate initiatives to suppress U.S. coal production.⁷

As a result, companies are facing less investor and regulatory pressure to pursue net-zero decarbonization goals.  According to the Wall Street Journal, during the first five months of 2025, proxy statement mentions of “net zero” dropped 32%, references to “carbon neutral” declined 30%, and references to Scope 1, 2 or 3 emissions fell 24% from the same period in 2024.

Investor support for climate change resolutions has also fallen dramatically.  Excluding those from conservatives, climate-focused proposals saw a nearly 50% drop in average support this year to 12.3% from 23.9% in 2024.

GHG Emissions

Proposals on greenhouse gas (GHG) emissions reduction were down by over one third from last year with 41 submitted—the lowest level since 2021.  They also fell short in the vote tally, averaging only 12.6% support, compared to 27.5% in 2024.

Five proposals were deemed excludable as micromanagement.  These generally asked for a climate transition plan in alignment with the Paris Agreement goals.  About a half dozen others were withdrawn due to continuing dialogue or commitments.

Proponents steered clear of Exxon Mobil, which faced no shareholder proposals whatsoever at its annual meeting after it sued Arjuna Capital and Netherlands-based Follow This last year to keep a recurring GHG reduction resolution off the ballot.  CEO Darren Woods vowed to resort to litigation again if activist shareholders continued to abuse the proxy proposal process.  This year, Follow This backed off filing any climate resolutions at major oil and gas companies—the first time since 2016—deciding that it would be counter-productive given the “current political pro-fossil fuel agenda.”

AI Data Centers

An emerging issue this year was how tech companies will meet their climate change-related commitments in view of the growing energy demands of their expanded AI data center operations.  Notwithstanding a

lack of proxy advisor support, the resolution achieved 20.1% at Amazon.com, though only 3.3% at Meta Platforms.

Financed Emissions

This year’s resolutions on climate change finance put a heavier emphasis on insurers than banks, where 2024 proposals seeking reports on net zero-unaligned clients were deemed excludable as micromangement.

Instead, As You Sow and the New York City Retirement Systems (NYCRS) repeated their requests for major financial institutions to annually disclose their clean energy financing ratios, which compare their financing for low-carbon energy projects versus fossil fuel projects.  These survived ordinary business challenges and last year resulted in two targets–Citigroup and JPMorgan Chase–agreeing to comply.  However, this year’s effort backslid with lower average votes than in 2024–13.2% versus 25.9%–due to the loss of ISS support.  Glass Lewis opposed the initiative in both years.

At insurers, As You Sow and Green Century Capital Management continued advocating for the disclosure of GHG emissions from their underwriting, insuring and investment activities.  Relying on SLB 14M, two targets—Allstate and Hartford Insurance Group—succeeded in omitting more prescriptive versions of the proposal as micromanagement.  These called for time-based targets or the alignment of emission reduction efforts with the Paris Agreement goals.

As You Sow also introduced a new variation asking Travelers Companies to explain the impact on its homeowners’ insurance customer base of higher pricing and the loss of coverage due to climate-related factors, such as more frequent and intense weather-related natural disasters and storms.  This received 12.6% support and, taken together, the insurance-focused resolutions averaged 13.8% support, down from 25.7% in 2024 when some were backed by the proxy advisors.

Conservative Pushback

For nearly two decades, conservative proponents have posed the issue of risks arising from companies’ voluntary carbon reduction commitments, including the feasibility of net-zero goals, their legitimacy based on scientific evidence, and the potential for fraud or misconduct allegations from greenwashing.  This year’s lineup also included a more direct approach by NLPC asking several oil majors to eliminate all emissions reduction targets covering their operations and energy products.

The vote result average (2%) was unchanged from last year, with the highest score occurring for a second time at United Parcel Service—6.2% compared to 8.1% in 2024.

Environmental Protection

Recycling was the most popular topic among other types of environmental proposals with 27 submissions—the highest number ever—with most focusing on plastics use in the consumer goods, food service and hotel sectors.  Proponents undertook several new initiatives this year on misleading recyclability labeling, tire shedding and food waste.

Plastic Pollution and Recycling

As You Sow focused half of its recycling resolutions on the phase-out of flexible plastic packaging because of missed 2025 plastic reduction and recycling targets established by the Ellen MacArthur Foundation’s U.S. Plastics Pact (USPP).  Flexibles and films are difficult to recycle because of their multi-layer, multi-material design.  Votes averaged 13.3% across six companies.

Beginning in 2022, As You Sow broadened its campaign on plastic pollution, initially by urging petrochemical companies to move away from virgin plastic to recycled polymer.  Last year, it shifted to plastic microfiber shedding, concentrating on the textile industry.  This season, it asked Goodyear Tire & Rubber to set tire wear shedding reduction goals, which garnered 5.6% support.

Green Century and The Last Beach Cleanup urged six companies to report on the legitimacy of their recyclability and recycled content claims on their plastic packaging labels.  Three proposals were withdrawn and the remainder averaged 9.8% support.

In a first-time initiative, NLPC countered liberal proponents by asking Colgate-Palmolive (2.9%) and Walmart (0.5%) to reexamine their plastic packaging policies based on credible scientific and economic analysis.  Walmart bowed out of the USPP this year, as did Mondelez International which was a target of both As You Sow and The Last Beach Cleanup.

Food Waste

Following its successful GHG reduction proposals last year, The Accountability Board (TAB) took up the topic of food waste, which was last addressed by other proponents in 2021.  Unlike the earlier versions, which focused on hunger and methane emissions from food decomposing in landfills, TAB’s thrust was the environmental impacts from the production of wasted food– GHG emissions and the consumption of freshwater, fertilizer and other resources.

TAB asked nine restaurant and retail companies to measure and set targets for reducing the food waste they generate, which resulted in 11% average support for the six voted.  Two others were withdrawn and one (at McDonald’s) was omitted as micromanagement.

Key Environmental Proposals

Human Rights

For the most part, human rights proposals did not deviate from recent themes, such as the adoption of comprehensive human rights policies and due diligence processes (HRDD), operations in conflict-affected and high-risk areas (CAHRA), indigenous people’s rights, and child exploitation.

AI factored into many of the proposals on data privacy and censorship aimed at Big Tech, while a new angle on the human right to water dealt with water scarcity due to AI data centers’ cooling requirements.

For a second year, faith-based organizations framed their advocacy on drug pricing and access to medicine as human rights impact assessments (HRIA), which averaged 21.2% at three pharmaceutical companies while another two were withdrawn due to agreements.   In 2024, only one proposal was voted at Eli Lilly (10%), which succeeded in excluding this year’s petition as micromanagement.

Along with Domini Impact Investments, religious orders also repeated their call for worker-driven social responsibility (WSR) reports.  The proponents contend that WSR is a more effective model for identifying and remedying human rights abuses, such as in agricultural supply chains at this year’s targets, Kroger (15%) and Wendy’s (7.6%).

Conservatives versus Liberals

Human rights is one topic where proponents on the left and right share some common ground, particularly on child exploitation, data privacy and business dealings with countries that have a record of human rights abuses.  Historically, voting results have been vastly different, but that gap is closing due to increased proxy advisor support for conservative-sponsored proposals.

This year, Glass Lewis supported six of their human rights resolutions at tech companies: two on child safety online by Bowyer Research and four on ethical AI data acquisition and usage (data privacy) by NLPC.  ISS backed two of the same data privacy resolutions, lifting average support to 11.2%, making it the top-performing conservative initiative on E&S.   In comparison, liberal versions of data privacy proposals, mostly on AI-driven advertising policies, averaged 12.6%, while their resolutions on child safety online averaged 11.4% (compared to 7.7% for conservatives).

Key Human Rights Proposals

Labor Rights

Shareholder proposal activity by organized labor was relatively subdued compared to recent years of heightened unionization activity and large-scale worker strikes.  Union pension plans substantially pared back their 2025 filings to 58 resolutions from 98 in 2024.  Their primary areas of focus continued to be workplace health and safety and freedom of association/collective bargaining rights.

Unionization Rights

In conjunction with their organizing efforts, labor proponents asked 10 companies in various industries to uphold the rights to freedom of association and collective bargaining in their operations as reflected in the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work.  Since this campaign began three years ago, average support has been steadily declining from a high of 36.2% in 2022 to 14.1% in 2025.  Only a handful of the resolutions went to a vote with most omitted as ordinary business.

In a first-time initiative, NLPC countered the union proposals by asking Starbucks to study the human rights risks related to labor organizing efforts, including how the company is protecting the rights of employees

who do not wish to be represented by a union as well as negative impacts on shareholder value.  The resolution received 1% support.

Worker Health and Safety

For a third year, the SOC Investment Group and other proponents raised concerns about unsafe working conditions atrestaurants and retail stores, typically by calling for independent, third-party audits.  This year, only three proposals went to a vote, averaging 16.1% support, with most of the others succumbing to ordinary business challenges.  A separate initiative on airline workers’ exposure to extreme heat was settled with the targeted companies.

AI Governance

AI-related proposals largely shifted this year from worker impacts to broader human rights concerns, such as privacy intrusions.  Only a handful of resolutions continued the theme of responsible AI governance, including board oversight of AI usage and ethical guidelines to protect workers from job automation, wage discrimination and bias in employment decisions.  These averaged 9% support, down from 19.1% in 2024.

Key Labor Proposals

Political Activities

Political spending disclosure was the most successful E&S initiative this season, bolstered by near universal support from ISS and Glass Lewis.  Five proposals received majority votes and overall average support rose to 41.8% from 25.8% in 2024.  Almost all were sponsored by Chevedden.

Resolutions on lobbying disclosure continued to be the most abundant type of political activities filing. However, most were absent from this year’s corporate ballots after Air Products and Chemicals successfully argued to the SEC last fall that the request constituted micromanagement by narrowly focusing on the company’s association with specific organizations and by requiring the reporting of dozens of distinct pieces of information.  Twenty-three other targeted companies followed suit, resulting in another 16 omissions and seven withdrawals after being challenged on the same basis.  The seven voted—all of which were opposed by ISS—averaged 14.5% support, down from 29.1% in 2024.  Glass Lewis backed

all but one of the resolutions (at Visa).  The American Federation of State, County and Municipal Employees (AFSCME), which is coordinating the campaign, plans to rework the proposals for 2026.

Proxy Impact and religious orders introduced new proposals this year calling for the alignment of lobbying and political influence activities with human rights policies.  The underlying issues included Alphabet’s child safety policies and commitments (5.3%) and Lockheed Martin’s foreign military sales to customers linked to human rights violations (9.8%).

Key Political Influence Proposals

Governance Issues

Governance Proposals

Resolutions on traditional governance measures scored the highest number of majority votes this season—45 in all advocating for board declassification, special meeting and written consent rights, the repeal of supermajority voting provisions, and a sale or merger of the company.  Because of the near universal appeal of these provisions among institutional investors, 22 companies chose not to oppose the proposals while about 40 companies countered them with competing charter or bylaw amendments.⁸

Chevedden and his affiliates continued to be the leading sponsors of governance initiatives, accounting for more than half of the over 300 filed this year.  TAB, which primarily focuses on the food sector, also more than doubled its efforts in the governance space with 18 proposals, up from seven in 2024.

Individual investor Chris Mueller resurfaced for a second year with 41 proposals addressing concerns related to direct stock purchase plans, such as offering “print on demand” stock certificates, protecting securities against abusive short-sellers, and providing transparency around arbitrage exposure enabled through recurring direct stock plan purchases.  As in 2024, these were readily omitted as ordinary business or for procedural deficiencies.

As discussed below, proponents added some new spins to standard-themed governance proposals, but these failed to generate strong investor support.

Special Meetings

Resolutions calling for the adoption or enhancement of special meeting rights were the most abundant shareholder proposal filing this season with 73 submissions, the highest number since 2022 (120).

Most continued to advocate for low (10% or 15%) share ownership requirements, which averaged 47.4% support, up from 43.9% in 2024.  Nine proposals won majority approval at companies that had high (40% or more) ownership thresholds or no special meeting rights at all.

This year, Chevedden embellished his submissions with nearly two dozen that simply called for the elimination of one-year holding periods in companies’ ownership requirements.  These averaged only 10.9% support–below the 11.6% received when he last introduced them in 2023.  ISS opposed all of the resolutions, while Glass Lewis only supported those where the company’s ownership threshold was above Glass Lewis’s preferred level of 10-15%.

Dual-Class Stock

Shareholder resolutions pertaining to dual-class stock with unequal voting rights took two forms this year.  Standard proposals calling for a recapitalization plan so that all outstanding stock has one vote per share averaged 21.9%, down from 33.5% in 2024.

A new variation introduced last year at Meta Platforms, asked that voting results be disaggregated by each class of shares to better identify the concerns of the independent shareholders.  Although ISS and Glass Lewis supported this initiative, the resolutions received lower average support (12.8%) than the recapitalization proposals, including at Meta Platforms which received both types of resolutions (20.6% versus 25.8%).  In addition to the three voted, another proposal was withdrawn at Hershey due to an agreement.

Director Resignation Policy

For a second year, the United Brotherhood of Carpenters and Joiners of America attempted to interest investors in a mechanism that would force directors who fail their election to step down from the board within 90 days after the vote certification.

To avoid last year’s exclusions for state law violations, the Carpenters presented three proposal variations.  Most called for a policy requiring a director to resign after two consecutive years of failed elections.  In one version, which the Carpenters plan to refile in 2026, the board would have the flexibility to accept or reject the first year’s resignation based on its business judgment.

The 13 resolutions voted garnered 20.8% support on average—up from 17.6% for the eight voted in 2024.  ISS has consistently opposed the resolutions while Glass Lewis supports them.

Board Declassification

As occurred in 2024 at Warrior Met Coal and News Corp, shareholder activists are continuing to advance governance reforms through their own proxy solicitations, thereby bypassing the Rule 14a-8 no-action process.

In conjunction with its proxy fight at Phillips 66, Elliott Investment Management tried a creative approach to declassifying the board, where repeat management resolutions had failed to receive the requisite 80% approval to effect the change through a charter amendment.  Elliott’s workaround was a Rule 14a-4 proposal calling for a policy requiring all incumbent directors, regardless of class, to submit letters of resignation in advance of each annual meeting.

Although the measure posed issues of legality under Delaware law and the company’s governing documents, it received 32.9% support and was endorsed by Glass Lewis but rejected by ISS.  Meanwhile, the company’s proposal to declassify the board via a charter amendment failed for the sixth time.

Bitcoin Diversification Strategy

NCPPR revisited the potential merits of cryptocurrency as an inflation hedge by asking some half dozen companies to assess whether adding Bitcoin to the corporate treasury would be in the long-term interests of shareholders.  The resolution was first introduced last fall at Microsoft and this year received similarly meager support (less than 1%) at Meta Platforms.  The remaining submissions were omitted as micromanagement.

Key Governance Proposals

* Of the 2025 majority votes, 22 governance proposals were not opposed by the board.
Of the 2024 majority votes, 15 of the governance proposals were not opposed by the board.

Director Votes

Directors attracted strong levels of support with 17% fewer receiving high opposition votes (over 30%) than in the first half of 2024.  This was due in part to investors moving away from numeric requirements on board diversity and overboarding and backing off director accountability votes on E&S issues.

Sixty-two directors at 43 companies received a majority of opposition votes—comparable to the first half of 2024—which in many cases was due to compensation concerns, director independence, poor meeting attendance, and board responsiveness—particularly in regard to “zombie” directors who remained on the board despite a majority of votes being cast against their reelection last year.  Only 10 of the 43 companies had majority voting and/or a director resignation policy, and four of the boards did not accept the resignations while two others are in deliberation.

An emerging trend was the inclination of hedge fund activists to wage “vote no” campaigns rather than running competing board slates.  While this strategy is less likely to unseat incumbents, significant shareholder dissatisfaction can send a strong message to boards and give the dissidents negotiating leverage, as occurred in several cases from this year’s proxy season:

• H Partners Management conducted a direct solicitation urging Harley-Davidson shareholders to withhold votes from three board members–the Chairman/CEO, presiding director and the longest-tenured director. Although all were reelected by slim margins (51%-59%), the dissident claimed to have won concessions on leadership changes—namely, that the three directors privately committed to key shareholders that they would step down before the 2026 annual meeting.
• Ancora Holdings Group’s withhold campaign at Forward Air succeeded in forcing out three legacy directors. The board chair failed to win majority support and resigned per the company’s director resignation policy.  The other two targeted directors, who received narrow investor support (52% and 62%), voluntarily resigned.
• Impactive Capital’s “vote no” campaign at WEX generated sufficient opposition to the Chairman/CEO and two other directors (31%-37%) that the dissident announced its intent to nominate at least four director candidates at the company’s 2026 annual meeting.

Reincorporations

Reincorporation activity picked up this year with nearly two dozen companies proposing to depart Delaware for other jurisdictions due in large part to the heightened litigious environment and recent court decisions that have called into question the predictability of Delaware law.   Nevada was the preferred destination for 16 of the companies, followed by Florida (two) and Texas (two with one–MercadoLibre—backing out).

To stave off the outflow, Delaware amended the Delaware General Corporation Law (DGCL) this spring by establishing safe harbors for controlling shareholder and interested party transactions, clarifying the definition of a controller, and limiting the scope of books-and-records demands.  Even so, some companies remain concerned that the amendments are untested and subject to judicial interpretation.

Nevada and Texas have similarly been revising their corporate statutes to create a more business-friendly legal environment, including enhancing liability protections for directors, officers and controlling shareholders.⁹  Texas went so far as to allow certain public companies to include in their governing documents minimum ownership requirements for shareholders to bring derivative suits and to submit shareholder proposals (other than director nominations).  Additional legislation signed into law in late June would mandate a disclosure regime for proxy advisory firms that make recommendations on companies incorporated or headquartered in Texas that are based wholly or in part on non-financial factors, such as ESG, DEI or sustainability scores, or that are in opposition to the board’s recommendations.¹⁰  ISS and Glass Lewis are pursuing legal action to declare the measure unlawful and have it enjoined.¹¹  The law takes effect Sep. 1, 2025.

At least two Texas companies—Tesla and Southwest Airlines—have amended their bylaws to avail themselves of the revisions to the Texas Business Organizations Code (TBOC) by establishing a 3% ownership limit for shareholders to initiate or maintain a derivative proceeding and to provide for a jury trial waiver for internal equity claims. Tesla has scheduled its annual meeting for Nov. 6, 2025, and therefore could be a test case for the proxy advisor disclosure requirement.

Compensation Issues

Compensation Proposals

As in 2024, Chevedden sponsored over 60% of the compensation-related proposals, primarily on severance pay, clawback policies and executive stock retention requirements.  The latter generated the most traction with the highest level of average support (33.8%).  Average votes on the expansion of recoupment policies plunged to 6.7% from 17.7% last year because most of the targeted companies already had robust policies that in many cases went beyond what the proposal sought.

Overall, ISS’s support for shareholder compensation proposals was consistent with last year.  Glass Lewis backed a much larger proportion than in 2024:  44% versus 20%, excluding those from conservatives.  This was due to the absence of any gender/racial pay equity proposals on 2025 ballots, which Glass Lewis generally opposed last year.  The two pay gap proposals filed this season (at Amazon.com and Comcast) were withdrawn after being challenged as micromanagement.

Severance Pay

Since their peak in 2023, Chevedden’s severance pay proposals have decreased in volume due to the number of companies adopting policies requiring shareholder approval of future executive pay packages that provide cash severance payments exceeding 2.99x base salary and bonus.

This year, average votes rose to 23.6% from 15.5% in 2024 due to better targeting and a higher number supported by the proxy advisors.  ISS’s and Glass Lewis’s recommendations were largely aligned since they are both looking for a policy that guarantees shareholder approval of golden parachute-level payouts.

Delink Pay from ESG

For a second year, NLPC asked companies to consider eliminating ESG metrics from executive pay incentives.  In 2024, the emphasis was on decarbonization targets but largely shifted this year to discriminatory DEI goals.  The five DEI-focused proposals averaged 1.3% support and one was withdrawn at PepsiCo, which agreed to drop DEI incentives for its executives.  Three others were omitted as substantially implemented or materially false and misleading because the companies’ executive compensation plans no longer included DEI-related inducements.

According to Farient Advisors, the share of S&P 500 firms using DEI metrics in their executive compensation plans fell sharply this year to 22% from 52% in 2024.¹²  It noted, however, that some companies simply modified their language to avoid it looking like a DEI measure.  NLPC said that next year it plans to press companies on whether they actually dropped their DEI efforts.  It is also filing lawsuits to induce firms to decouple executive pay from DEI goals.

Key Compensation Proposals

Say on Pay

Buoyed by last year’s strong market performance, management SOP proposals posted solid results across all U.S. public companies for the first half of 2025.  While average support (90.5%) dipped slightly below last season’s average (91%), the failure rate (1.3%) and the proportion of companies receiving less than 70% support (6.1%) was identical.  Similarly, the percentage of companies receiving a negative ISS recommendation on SOP (12.3%) and the average support they received (72.6%) were nearly on par with the 2024 proxy season.

Of the 36 failures through June of this year, 25 were among Russell 3000 firms, including five in the S&P 500 index—Molina Healthcare, Simon Property Group, Otis Worldwide, Thermo Fisher Scientific and Warner Bros. Discovery.  Only nine cases (25%) of multi-year failures occurred, compared to over one-third of the pay rejections in the first half of 2024.

The reasons underpinning the failed votes also shifted.  According to Semler Brossy’s review, the most common investor concerns this year were special awards/mega-grants, shareholder outreach and disclosure, and non-performance-based equity.¹³  Last year’s failures were primarily attributed to pay-for-performance misalignment, the rigor of performance goals, and problematic pay practices.

Looking ahead, next year’s SOP votes will be impacted by Glass Lewis’s planned overhaul of its quantitative pay-for-performance (PFP) assessments.  This will include replacing the historical A-F letter grade system with a new 0-100 numerical scorecard system, with an associated concern level, and lengthening the evaluation period for key PFP tests from three to five years.

Longer term, the SEC is revisiting executive compensation disclosure requirements to assess whether the current rules are cost-effective for company compliance and provide material information for investors in plain English.  At a June roundtable discussion, participants cited several areas in need of reform, including  overly complex and lengthy Compensation Discussion and Analysis (CD&A) disclosures; the high compliance costs of pay-versus-performance (PvP), CEO pay ratio and clawback requirements; and the treatment of executive security expenses as perquisites.  The Commission is continuing to solicit public comments to inform its next steps.

SOP Voting Trends

Overview

2025 will be a transformational year marked by a more favorable business environment including the prospect of reduced regulation, lower taxes, reindustrialization, innovation and energy independence.  The flurry of White House activity will be unrelenting, warranting ongoing attention and adeptness by corporations.

In comparison, this season’s annual meetings are shaping up to be relatively calm as shareholder activists assess how they can adapt to this dynamic landscape and recalibrate their campaigns going forward.  Some of the trends emerging this spring include the following:

• A more corporate-friendly SEC: Under Republican leadership, the SEC will take a more measured
  approach to rulemaking and enforcement while focusing on its core mission of protecting investors, maintaining fair and efficient markets and facilitating capital formation.  Early on, the SEC undertook actions to deter shareholder activists and large asset managers from pressing companies to conform to environmental, social and governance (ESG) agendas.  These include revoking and replacing Biden-era guidance, which had made it difficult for companies to exclude Rule 14a-8 proposals that have a broad societal impact, and issuing clarifying guidance on shareholder engagements that may rise to the level of attempting to influence or control companies.  The SEC has also taken initial steps to unwind the 2024 climate disclosure rule.
• Less “noise” on proxy ballots:  To the relief of issuers and institutional investors suffering from “shareholder
  proposal fatigue,” the volume of filings to date (730) has subsided substantially after reaching its highest level last year (1,034) since 2015 (see Table 1).   Submissions of environmental and social (E&S) resolutions are down by nearly a third from last year’s peak as proponents awaited an expected course change by the incoming Trump administration and the GOP-led SEC.  Omissions are also running higher than last year, which stand at 18% of all filings compared to 12% in 2024.
• Governance measures stand out: Resolutions focused on widely accepted governance principles feature
  prominently in this season’s shareholder proposal lineup and will continue to prevail in the majority vote count (see Table 2).  E&S proposals are unlikely to rebound after losing steam in voting support since 2021 due to the “quantity over quality” approach of proponents.  Major asset managers could shift towards a more neutral stance, as did Vanguard last year when it refrained from supporting any E&S resolutions.
• Demise of diversity, equity and inclusion (DEI).  The Trump administration’s clamp-down on illegal DEI
  practices in the federal government and among federal contractors and the broader corporate community are accelerating the pace of company retreats from DEI commitments. Board diversity mandates are also disappearing after a federal court voided Nasdaq’s requirements in December.  As a result, DEI expectations are being purged from companies’ public communications and investor voting policies, which will frustrate pro-DEI activist campaigns that depend on robust disclosures.
• Pro- and anti-ESG faceoffs: Conservative-leaning investors are highly active again this proxy season and
  have already accounted for 39% of the first quarter shareholder proposal votes (see Table 3).  Despite the marginal support they generate, their campaigns will capture media attention, particularly at companies that must navigate competing resolutions on DEI, climate change and other E&S issues with diverging viewpoints.

This report further examines these and other key issues that will underpin the 2025 proxy season.

Table 1: Shareholder Proposal Trends

Table 2: Top Shareholder Proposal Filings: 2025 (as of April 7) – 2024 (full year)

Table 3: Early Votes (reported through April 7, 2025)

SEC Reforms 

Under GOP leadership, the SEC is pivoting away from former Chair Gary Gensler’s aggressive approach to rulemaking and enforcement and will prioritize reducing regulatory burdens, promoting capital formation and innovation, and creating a crypto-friendly regulatory framework.

In February, Acting SEC Chair Mark Uyeda began the process of dismantling the agency’s 2024 climate change disclosure rule, which was voluntarily stayed due to legal challenges over the rule’s validity.  In late March, the commissioners voted to end the SEC’s defense of the rule, signaling that the agency may eventually abandon it altogether. 

Other Gensler-era ESG rulemaking is not expected to survive either.  This includes proposed rules on human capital management and board diversity disclosure, which were delayed to October 2025 in the SEC’s fall 2024 Regulatory Flexibility Agenda.  

As described below, the SEC took immediate steps to offer relief to issuers from being pressured to adopt ESG measures.  In February, it issued new guidance that will facilitate the exclusion of shareholder proposals and will discourage large investors from being coercive when conducting engagements with companies.  Other reforms to the Rule 14a-8 process may be in store, including reexamining ownership thresholds, enhancing oversight of the proxy advisory firms and deterring robovoting practices.

No-Action Requests

The SEC’s Feb. 12 release of new interpretative guidance on the omission of Rule 14a-8 proposals has the potential to significantly disrupt the number of shareholder resolutions reaching ballots this season, particularly those dealing with E&S issues.¹

Staff Legal Bulletin (SLB) 14M largely reinstates pre-SLB 14L guidance, making it easier for companies to exclude shareholder resolutions on economic relevance and ordinary business grounds by applying a narrower, company-specific approach rather than looking to broad societal impacts.   Proposals that raise issues of social or ethical significance may be excludable if they do not have a sufficient nexus to the targeted company or if they relate to operations that account for less than 5% of total assets, net earnings and
gross sales.  

SLB 14M also reverts to previous staff guidance with expanded micromanagement exclusions, including proposals that are highly prescriptive, seek intricate detail or specific timeframes or methods for implementing complex policies, or deal with compensation available only to senior executives and/or directors.  

SLB 14M additionally calls attention to the fact that the SEC’s 2022 proposed amendments to the substantial implementation, duplication and resubmission bases for exclusion were never finalized.  The amendments would have narrowed these standards of omission by requiring that a company meet all of the proposal’s essential elements to be considered substantially implemented and for the proposal to address the same subject matter and seek the same objective by the same means in order to qualify for duplication or resubmission exclusion.  Henceforth, the staff will review these no-action requests under operative SEC rules and applicable staff guidance. 

The SEC is allowing companies to amend pending no-action requests or submit new ones, even if their filing deadlines have passed, if they wish to raise new legal arguments based on the updated guidance.  So far, 16 companies have done so, primarily to challenge various E&S proposals on ordinary business, micromanagement and economic relevance grounds.

Investor Engagements

New guidance on beneficial ownership reporting issued by the SEC in February will impact the timing and substance of outreach discussions between companies and their major investors by expanding on what constitutes an attempt to change or influence control of a company.²  

The revised Compliance and Disclosure Interpretations (CD&Is) provide clarity around situations when a large (greater than 5%) investor’s engagements would require more expansive disclosures on Schedule D, rather than the short-form Schedule G.  While a shareholder may discuss with management its views on a particular topic and how its views inform its voting decisions, it would be disqualified from reporting on Schedule G if the discussion constituted pressure tactics.  This would include if the shareholder explicitly or implicitly conditioned its support of the issuer’s director nominees at the next director election on the issuer abiding by the shareholder’s voting policy or adopting the shareholder’s recommendations regarding its governance provisions; compensation practices; or a social, environmental or political policy.

The new reporting requirements squarely take aim at a handful of institutional investors whose concentrated ownership of U.S. public companies gives them outsized influence over corporate decision making.  According to Free Float Analytics data cited by Reuters, in the fourth quarter of 2024, BlackRock and Vanguard filed 13G disclosures at 52% and 48%, respectively, of all U.S. public companies, followed by Dimensional Fund Advisors (9%), Fidelity Investments (9%) and State Street Global Advisors (SSGA) (7%).³

As a result, large investors who wish to retain their 13G status may be reluctant to share with portfolio companies their voting intentions or detailed perspectives on a given company.  SSGA, for example, overhauled its 2025 proxy voting and engagement policy and deleted all references as to when it will vote against directors and other management proposals.⁴ Issuers will therefore need to be attentive to the voting behavior of their major investors this year to stay apprised of issues that may trigger adverse votes.

E&S Issues

Shareholder proponents have substantially scaled back their submissions of E&S proposals this year, which have seen declining support since 2021 and posted only three majority votes in 2024.  So far, only about 429 E&S resolutions have been filed—a 30% decrease from last year’s 610.  The Interfaith Center on Corporate Responsibility (ICCR) also reported only 217 member filings for 2025, which is their lowest level since 2014.  As You Sow and Proxy Impact attribute the pull-back to proponents taking a “wait and see” approach in view of the change in presidential administration and expected policy shifts at the SEC.

E&S advocates have struggled to maintain the momentum their initiatives saw several years ago due in large part to complaints by major asset managers of the resolutions being overreaching, poorly targeted, lacking economic merit, or sufficiently implemented.  Last year, SSGA supported only 9% of E&S resolutions, BlackRock supported 4% and Vanguard supported none.  In contrast, 2021 support levels were 32% for SSGA, 40% for BlackRock and 26% for Vanguard.⁵ 

The number of E&S resolutions reaching ballots this season may also be down due to omissions.  So far, 15% of E&S proposals have been excluded, up from 8% last year, of which two-thirds were based on ordinary business arguments.  Another 54 no-action requests directed at E&S initiatives remained pending as of April 7.  Meanwhile, the rate of withdrawals, which are ongoing, is tracking about 11% behind last year’s level, including proposals that were reportedly filed but did not show up on ballots.

In addition to greenhouse gas (GHG)/climate transition plan resolutions, this year’s DEI-related proposals, which span both ends of the ideological spectrum, rank among the most popular shareholder resolution submissions.  Although some proposal formulations are less prescriptive, few topics among this year’s E&S lineup are likely to attract majority support.

DEI

DEI promises to be one of the most contentious issues this season for both advocates and detractors.  President Trump’s executive orders (EO) ending illegal DEI programs in the federal government and directing federal agencies to combat illegal discrimination and preferences in the private sector will set into motion the rapid decline of corporate DEI programs that violate civil rights laws.⁶

Corporate rollbacks of DEI initiatives, which were widely adopted in response to the #MeToo and Black Lives Matter movements, were initially sparked by the 2023 U.S. Supreme Court decision overturning affirmative action in higher education, prompting concerns over the risk of legal exposure.  The trend accelerated last year when social media influencer Robby Starbuck exposed consumer brand companies’ DEI programs, igniting a public backlash.

In keeping with the EOs, federal agencies are already deploying their enforcement powers to combat discriminatory DEI practices. The Federal Communications Commission (FCC) recently launched investigations into the current and past DEI policies of Comcast/NBC Universal and Walt Disney/ABC for potential violations of the FCC’s equal employment opportunity regulations. The Department of Justice (DOJ) and Equal Employment Opportunity Commission (EEOC) have also issued two technical assistance documents addressing their views on what workplace DEI practices may be unlawful.⁷ 

As a result, companies have been scrubbing mentions of DEI in their earnings calls, annual reports, and public communications and have disbanded DEI positions and departments, refocused employee training from diversity to business operations, and ended quotas for hiring, promotions, and the selection of suppliers.  However, it is unclear to what extent corporate DEI pullbacks are more optics than substance.  According to an April survey by the Society of Governance Professionals, only 37% of the responding member companies plan to adjust or have already adjusted their workforce-related DEI policies, programs and/or practices in response to the EOs.  Of these firms, over 80% are removing or rebranding DEI-related terminology from internal and external communications, while only 40% are scaling back diversity hiring and promotion goals or modifying DEI-linked pay metrics.

Workplace DEI Proposals

This year’s DEI-related proxy resolutions largely reflect pro- and anti-DEI activists’ reaction to the large-scale corporate retreat from DEI in 2024.  As You Sow is asking companies that rolled back their DEI commitments, including Ford Motor, Harley-Davidson and Tractor Supply, to disclose the research and analysis their boards undertook before changing their DEI policies and practices.   The AFL-CIO is similarly asking Best Buy, Lowe’s Companies and Tractor Supply to issue an LGBTQ+ non-discrimination report out of concern that their decision to stop reporting data to the Human Rights Campaign (HRC) reduces transparency around their non-discrimination policies.  Tractor Supply was able to block both resolutions on ordinary business or substantial implementation grounds, while Harley-Davidson successfully excluded the AFL-CIO resolution as micromanagement.

As You Sow has also rephrased its proposals asking companies to report on the effectiveness and outcomes of their DEI programs based on quantitative metrics for workforce hiring, promotion and retention by gender, race and ethnicity.  The revised language requests a report on the effectiveness of companies’ efforts to create a workplace where all employees can contribute to the company’s success.  

Conservative proponents are building on the momentum of 2024 by asking companies to report on the legal and reputational risks of maintaining their DEI programs or, in a more direct approach, to consider eliminating them altogether.  The National Center for Public Policy Research (NCPPR) is also calling on several companies to cease participating in the HRC’s Corporate Equality Index, which tracks employers’ commitment to LGBTQ+ equality practices.  A common concession among Starbuck’s corporate targets was ending their involvement with the HRC. The resolution received 1.5% at Walt Disney and is pending at CVS Health.

The National Legal and Policy Center (NLPC) is petitioning about 10 companies to revisit their executive incentive guidelines and consider eliminating discriminatory DEI goals.  Most of the targeted companies unsuccessfully argued to the SEC that they had substantially implemented the request, which simply asked them to review their incentive pay metrics—which they do annually anyway—rather than to make changes to them.  Several of the targets no longer include DEI goals in their executive pay measures which, according to WTW, have been losing ground at large-cap companies since 2021.⁸ 

Initial DEI Votes

The season’s first anti-DEI proposals, filed by NCPPR, asked Costco Wholesale to study and report on the financial risks associated with its DEI roles, policies and goals and for Apple to consider abolishing its DEI programs altogether.  Although the negligible levels of support (less than 2%) were regarded by the media and advocates as a referendum on the companies’ DEI programs, the votes essentially reflect the fact that the proxy advisors and large institutional investors almost never support resolutions from conservative proponents, irrespective of the topic.

Deere found itself in the crosshairs of pro- and anti-DEI proposals after paring back its DEI initiatives last year in response to Starbuck’s campaign.  Deere even stated in its proxy that because of the ideologically opposing perspectives of the proposals, it was unable to satisfactorily address the concerns of proponents with one set of views without creating concerns for those with an opposing viewpoint.

NLPC and As You Sow submitted similar resolutions at Deere seeking additional gender/racial workforce statistics to determine if the company engages in discriminatory versus merit-based hiring (NLPC) and to assess the effectiveness of the company’s DEI programs in creating a “meritocratic” workplace (As You Sow).  The NLPC proposal received 1.7%, while As You Sow withdrew its resolution before the annual meeting following dialogues with the company and after ISS and Glass Lewis had recommended against it.

The other notable vote at Deere was on a proposal by corporate gadfly John Chevedden calling for a third-party civil rights audit to analyze the bias and discrimination risks of the company’s policies, practices, products and services, including the adverse impacts of its recent rollback of its DEI commitments.  The resolution received 29.5%–well above last year’s 12.6% average support for similar proposals—and was backed by ISS and Glass Lewis.

Board Diversity

In addition to workplace DEI policies and programs, board diversity requirements are also disappearing.   Last December, the U.S. Court of Appeals for the Fifth Circuit invalidated Nasdaq’s 2021 board diversity rule which mandated that listed companies annually disclose the diversity of their directors and have at least one woman, racial minority or LBBTQ+ member on their boards or explain why they do not.  

Companies will also see relief this season from meeting board diversity mandates from proxy advisors and large institutional investors.  Because of the Trump administration’s heightened scrutiny of DEI practices, ISS suspended its consideration of board gender and racial/ethnic diversity factors when making voting recommendations on director elections at U.S. companies.  Glass Lewis will continue applying its policy but will flag its recommendations against directors for diversity-related reasons so its clients may vote differently.

Major institutional investors also removed board diversity considerations from their 2025 proxy voting policies, perhaps to avoid giving the appearance of promoting boardroom quotas.  BlackRock and State Street eliminated their numerical and percentage diversity targets for U.S. boards, while Vanguard, which had no explicit board diversity quotas, removed references to gender, racial and ethnicity diversity in favor of a broader range of “personal characteristics.”  Goldman Sachs Group similarly dropped its requirement that any company it takes public in the U.S. or Europe must have at least two diverse directors, including
one woman.

Investors who maintain quota-style voting policies may find them harder to apply if companies, such as those listed on Nasdaq, discontinue providing disclosure of board demographics.⁹ As a result, some investors will continue to press companies to voluntarily provide the information.  As part of its Boardroom Accountability Project 2.0, launched in 2017, the New York City Retirement Systems (NYCRS) is continuing to press companies to publish board matrices describing the skills, gender and race/ethnicity of individual directors.  Earlier this year, it reached agreements with Boyd Gaming and NextEra Energy and has shareholder proposals pending at Corpay and DraftKings Holdings.

Climate Change 

As with DEI, the Trump administration is deconstructing the climate change agenda.  As widely anticipated, President Trump issued a series of EOs to promote America’s energy independence and roll back Biden-era climate regulations, including withdrawing the U.S. from the Paris Agreement and other climate-related financial commitments. To advance these EOs, Environmental Protection Agency (EPA) Administrator Lee Zeldin subsequently announced 31 historic actions the agency will undertake to overhaul environmental regulations to unleash American energy, reduce the cost of living and spur economic growth. A follow-on EO, issued in early April, is directed at illegitimate state-level impediments to domestic energy production, including state laws purporting to address climate change or involving ESG initiatives, environmental justice, carbon or greenhouse gas (GHG) emissions, and funds to collect carbon penalties or taxes.¹⁰

In mid-March, U.S. Senate Banking Committee member Bill Hagerty (R-TN) introduced legislation–the “Prevent Regulatory Overreach from Turning Essential Companies into Targets” (PROTECT USA) Act of 2025—which would shield U.S. companies from regulatory encroachment by the European Union (EU), specifically the Corporate Sustainability Due Diligence Directive (CSDDD).¹¹ Adopted in May 2024, the CSDDD converts a range of international conventions into binding laws which would force American companies to adopt the EU’s net-zero carbon emissions target and other standards that exceed the requirements of U.S. law and impose severe financial penalties for violations.  Hagerty’s bill would prohibit U.S. entities in the agriculture, mining, energy, timber and manufacturing sectors from being forced to comply with the CSDDD or any foreign sustainability due diligence regulation and would block any adverse actions taken against such entities for action or inaction related to the regulation.

For its part, the EU released its Omnibus Simplification Package in February which would reduce the administrative burdens associated with the CSDDD, Corporate Sustainability Reporting Directive (CSRD), and EU Taxonomy Regulation.  The changes would exempt about 80% of companies from mandatory disclosures under the CSRD, simplify and reduce reporting and diligence requirements, and delay implementation deadlines.  The Commission said the revisions were needed to strengthen Europe’s competitiveness in view of the global demand for affordable and reliable energy.

United Nations-backed climate coalitions are also breaking apart.  In the first weeks of 2025, six of the largest U.S. banks pulled out of the Net Zero Banking Alliance (NZBA), while BlackRock—and more recently J.P. Morgan Asset Management–departed from the Net Zero Asset Managers Initiative (NZAM), which has since suspended its primary activities.  The defections follow years of probes by GOP lawmakers and state attorneys general (AGs) over potential anti-trust concerns arising from climate collaborations. Signatories of the organizations pledge to advance global net-zero goals through their investment, lending and policy advocacy activities.  NZAM members also agree to implement a stewardship and engagement strategy, with a clear escalation and voting policy, that is consistent with the ambition for all assets under management to achieve net-zero emissions by 2050 or sooner.¹² 

In view of the rapidly evolving regulatory landscape, climate-focused shareholder activists may be more compelled to pursue their agenda through private ordering.  This year, shareholder proposals addressing climate issues remain numerous, but it remains to be seen to what extent investor interest will hold up.  

In his 2025 annual letter investors, BlackRock Chair/CEO Larry Fink dispensed with mentions of DEI, ESG, climate change and sustainability.¹³ Instead, he continued last year’s theme of “energy pragmatism” in view of the surging global demand for electricity, fueled by artificial intelligence (AI) data centers, which cannot be met with renewables.  This year’s emphasis was on increasing energy production-particularly nuclear power–reducing burdensome regulatory and permitting requirements, and making investments in infrastructure projects through private markets more accessible to investors. 

GHG Emissions

Proponents of GHG emissions reduction proposals are gravitating towards less prescriptive requests after scoring only two majority votes in 2024 at Jack in the Box and Wingstop.  The sponsor of last year’s successful resolutions—The Accountability Board (TAB)—said that it deliberately made broadly worded requests that left discretion to companies as to what reduction goals they set and the scope of emissions they covered.

As a result, this year’s GHG resolutions may receive higher levels of support.  In many cases, the proposals simply ask companies how they plan to reduce their GHG emissions in alignment with the Paris goals or whether their current climate transition plans align with or can reasonably meet such goals.  Green Century Capital Management, which is focusing on Scope 3 emissions disclosure and target-setting across various industries, is also avoiding overly explicit language by, for example, asking companies how their supply chain emissions reduction targets align with their net-zero ambitions.

As You Sow and NYCRS are resuming their campaign at major banks to annually disclose their clean energy financing ratios, which compare their financing for low-carbon energy projects versus fossil fuel projects.  Last year, the proponents reached agreements with Citigroup, JPMorgan Chase and the Royal Bank of Canada to disclose the new climate metric, while the proposals voted averaged 25.9% support.

AI Data Centers

Along with individual investors, As You Sow has additionally introduced a new proposal at Amazon.com and Meta Platforms to explain how they will meet their climate change-related commitments in view of the growing energy demands from their build-out of AI data centers.  According to the U.S. Energy Information Administration, U.S. power consumption is expected to reach record levels in 2025 and 2026 due in large part to rising demand from data centers supporting AI and cryptocurrency.

In a related initiative, NorthStar Asset Management is raising concerns with the water demands of AI data centers and how companies are mitigating the impact on local communities of potential water supply disruptions and scarcity.  NorthStar reached an agreement with Adobe and has proposals pending at Digital Realty, Salesforce and Zoom Communications.

Climate Risk in Retirement Plans

For a fourth year, As You Sow is asking a handful of companies to assess and report on the actions they are taking to address climate change risk in their retirement plan options.  The proponent takes particular issue with target date funds offered by BlackRock, Fidelity and Vanguard, which are typically the most popular plan options but are heavily invested in high-carbon industries and companies that contribute to deforestation.  

Since being introduced in 2022, the resolutions have marshalled no more than 13% support and have been uniformly opposed by ISS and Glass Lewis.  Support for this year’s resolutions has been similarly weak—11.9% at QUALCOMM and 7.2x% at Walt Disney, with one still pending at Centene.

Net-Zero Pushback

Conservative proponents are continuing to rebuke net-zero policies for being economically destructive in view of the high global demand for oil and gas.  NLPC is asking several oil majors, including Chevron and ConocoPhillips, to remove all GHG emissions reduction targets covering company operations and energy products, while NCPPR has filed a repeat proposal at United Parcel Service to report on the risks arising from voluntary carbon-reduction goals, which received 8.4% support in 2024.

New Breeze is probing Duke Energy and several banks over their commitments and agreements involving net-zero goals.  Two of its targets—Bank of America and JPMorgan Chase—were successful in omitting the resolutions as substantially implemented after having dropped out of the NZBA in February.   In February, Wells Fargo became the first major U.S. bank to abandon its 2050 net-zero targets for financed emissions along with its sector-specific interim targets for 2030.  It said that achieving those goals was dependent on factors beyond its control, including public policy, consumer behavior and technology changes.

Environmental Protection 

Shareholder proposals on biodiversity and natural capital have surged in volume in recent years though support levels have fallen dramatically since 2021, in large part because companies have substantially addressed the requests.¹⁴ 

This year’s nature-related proposals include some new themes as well as repeat topics such as deforestation, plastic pollution and recycling, microfiber shedding, regenerative agriculture, and sourcing minerals from deep-sea mining.

• Avocado sourcing: As You Sow is asking several retailers what actions they are taking to prevent sourcing avocados from deforested land, particularly in Mexico.  Agreements were reached with Mission Produce and Target and the proposal remains pending at Kroger.
• Misleading labeling: Green Century Capital Management and The Last Beach Cleanup are urging food,
  beverage and consumer packaged goods companies to remove misleading recyclability claims from their plastic packaging labeling.
• Food waste: TAB is requesting restaurant and retail companies to measure and set targets for reducing the food waste they generate.  According to the Environmental Protection Agency, food accounts for almost one quarter of the waste sent to U.S. landfills.
• Plastic recycling policy review: New this year is a proposal by NLPC asking Colgate-Palmolive to
  reexamine its plastic production and packaging policies based on non-biased, objectively verified, scientifically accurate, and economically thorough research.  The proponent contends that single-use plastics have been unjustifiably demonized by environmental activists when plastic pollution is primarily the result of poor disposal practices, not production.

Workers’ Rights

Union pension plans have been less active this year in filing shareholder resolutions with about 53 submissions to date compared to 98 during 2024.  As in the past, a central focus is on workplace health and safety and freedom of association/collective bargaining rights.

• Worker health: The SOC Investment Group and NYCRS have sponsored a new proposal at four airlines to report on their efforts to mitigate extreme heat exposure throughout the companies’ operations that may impact worker health.
• Workplace violence: For a third year, various proponents including SOC are raising concerns about unsafe working conditions–particularly gun violence by customers—at restaurants and retail stores.  Last year, the proposal received 19.2% at Walmart and 30% at Chipotle Mexican Grill, where it has been refiled for 2025.  Both ISS and Glass Lewis have been supportive of this initiative.
• Non-interference policy:  In conjunction with their organizing efforts, labor proponents are asking about nine airline, automotive, broadcasting, food and banking companies to uphold the rights to freedom of association and collective bargaining in their operations as reflected in the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work.  Since this campaign began in 2022, average support has been declining each year from a high of 36.2% to 25.7% in 2024.The AFL-CIO is revisiting this issue at Warrior Met Coal where last year the proposal received its highest level of support (46.1%).  In response, the company has already commissioned an independent third-party assessment of the company’s respect for human rights, including freedom of association and collective bargaining rights.
• Anti-unionization: At Starbucks, NLPC countered the unionization drive by directing the board to study
  the human rights risks related labor organizing efforts, including how the company is protecting the rights of employees who do not wish to be represented by a union as well as negative impacts on shareholder value.  Although the company completed a similar assessment last year, it was produced as a result of a majority-backed shareholder proposal from pro-union activists and addressed only pro-bargaining rights perspectives.   The resolution received 1% support and was opposed by ISS and Glass Lewis.

Health impact-related proposals are down by about one third from last year due to the dramatic decline in abortion access resolutions, which peaked in 2023 following the U.S. Supreme Court decision to overturn Roe v. Wade.  Proponents have also intertwined their initiatives on the cost of prescription drugs with human rights standards and backed off their focus on anti-competitive practices such as patent exclusivities.

Meanwhile, concerns around food safety and product labeling will be reflected in Robert F. Kennedy Jr.’s reorganization of the Department of Health and Human Services (HHS) to prioritize reversing chronic disease by focusing on safe, wholesome food, clean water and the elimination of environmental toxins.

• Access to medicine: For a second year, faith-based organizations are taking a human rights approach
  to access to medicine and drug pricing at a half-dozen pharmaceutical companies.  The proposals call for a human rights due diligence process (HRDD) and human rights impact assessment (HRIA) to determine the extent drugmakers are increasing the access and affordability of their medicines.  A similar resolution last year received 10% at Eli Lilly and was withdrawn at Bristol-Myers Squibb and Pfizer.
• Access to healthcare: ICCR members pulled a much-touted measure at UnitedHealth Group to
  prepare a report on the public health costs and macroeconomic risks created by company practices that delay or deny access to healthcare.  The proposal was prompted by the public outrage over the exorbitant costs and restricted access to healthcare that ensued following the shooting of CEO Brian Thompson.  In view of the company’s no-action challenge, the proponents opted to withdraw the resolution so as not to jeopardize the chance to refile it next year.
• Nutrition reporting: In a new campaign initiated last fall by ShareAction, religious organizations are
  asking food and beverage manufacturers to report on the healthiness of their products using internationally recognized Nutrient Profiling Models (NPMs).  The resolution was withdrawn at Kraft Heinz and omitted at Mondelez International as micromanagement.
• Non-sugar sweeteners: After a longstanding campaign on the role of sugar in disease causation and obesity, particularly among children, religious orders switched their focus last year to the potential health harms of non-sugar sweeteners in soft drinks.  The proposal has been refiled at Coca-Cola and PepsiCo, where it received 10.7% and 11.5%, respectively, in 2024.

Political Activities

Notwithstanding the release of SLB 14M, companies have been more successful in recent years in omitting shareholder proposals on ordinary business and micromanagement grounds.  Lobbying disclosure resolutions became an early casualty of the 2025 proxy season after Air Products and Chemicals successfully argued for micromanagement exclusion because the supporting statement narrowly focused on the company’s association with specific organizations, such as the National Association of Manufacturers (NAM) and the American Legislative Exchange Council (ALEC).

According to the American Federation of State, County and Municipal Employees (AFSCME), a long-time sponsor of corporate lobbying proposals, there were eight previous determinations by the SEC staff between 2011 and 2020 that the proposals focused primarily on companies’ general political activities and did not constitute micromanagement.

Out of over three dozen lobbying proposals filed for 2025—mostly by Chevedden—about two dozen companies are seeking no-action relief on micromanagement grounds, in some cases also noting the highly prescriptive and detailed nature of the report being sought.  So far, 15 requests have been granted, two remain pending, and eight were withdrawn by the proponents after being challenged.  

As a result, the proponents are crafting revised versions of their proposals which instead focus on what actions the company has taken when the lobbying efforts of the trade associations and social welfare groups in which it is a member contradict the company’s public position.

Conservative Initiatives

Conservative-oriented proponents have cut back their submissions this year, which stand at about
100 proposals, down from a high of 120 in 2024. However, their share of all 2025 filings has risen to 14% from
11% in 2024, and this year they account for 21% of all E&S filings, compared to 18% in 2024.  Although their initiatives typically draw negligible levels of support, many of their longstanding issues—particularly their opposition to DEI and ESG—are being addressed by the Trump administration and GOP Congressional lawmakers and state officials.

This year, several new right-leaning advocacy groups have joined in on issues such as censorship, politicized debanking, religious discrimination in corporate charitable giving, and data privacy in AI systems.  These include the Heritage Foundation, GuideStone Capital Management, the Catholic Diocese of Fort Worth, Investing with Purpose Capital, and the Oklahoma Tobacco Settlement Fund.

In an unusual move, Bristol-Myers Squibb reached an agreement with NCPPR to include two of its resolutions on its 2025 ballot.  One calls for the cessation of the company’s DEI efforts and the second requests the establishment of a board committee to oversee and review the impact on the company’s financial sustainability of its policy positions, advocacy, partnerships and charitable giving on social and political matters.

AI and Data Protection 

NLPC is targeting Big Tech companies with proposals on how they are safeguarding user data from potential unethical or improper usage in the development and training of their AI products.  The massive amounts of training data needed by AI systems are often sourced from personal information, copyrighted material and proprietary business data, in some cases through third parties such as OpenAI, which has faced multiple allegations of unethical data collection practices without data owners’ consent.

The proposal was first introduced at Microsoft last fall where it received 36.2% support—one of the highest levels attained on a social proposal sponsored by a conservative investor.  It also received the rare backing of both proxy advisors.  At Apple’s February annual meeting, it received 11.6% and was endorsed by Glass Lewis but opposed by ISS.  Additional resolutions are pending at Alphabet, Amazon.com and Meta Platforms.

Censorship

Conservative investors’ 2025 censorship proposals take aim at potential risks arising from discrimination against advertising buyers and sellers based on their political or religious views.

A particular concern has been companies’ affiliation with the Global Alliance for Responsible Media
(GARM), which was formed by the World Federation of Advertisers (WFA) in 2019 to help advertisers avoid supporting harmful or illegal content in digital media that could damage their brands.  GARM was disbanded in 2024 following a lawsuit by X and a House Judiciary Committee investigation over its “cartel-like behavior” to demonetize platforms, podcasts, news outlets and other content deemed disfavored by GARM and its members.¹⁵ 

Bowyer Research, which is the primary sponsor of the proposals, contends that many of the advertising agencies, corporations and trade associations that were GARM members continue to maintain similar censorship practices.  The measure received 1% at Walt Disney and is pending at six other companies.  The proponents reached agreements with Johnson & Johnson, Mastercard and PepsiCo, which have committed to independent decision-making in their advertising.

Bitcoin Diversification Strategy 

President Trump’s EOs aimed at making the U.S. the “crypto capital of the world” marks a dramatic shift from the Biden administration’s often hostile approach to digital assets, particularly regarding SEC enforcement actions.¹⁶ In addition to developing a federal regulatory framework for crypto assets, the Trump administration is considering the creation of a national digital asset stockpile.  About two dozen states are also advancing legislation for strategic Bitcoin reserves.

This forward-looking stance on digital technology could give a lift to proposals filed by NCPPR asking several companies, including Dell Technologies, Meta Platforms and Salesforce, to conduct an assessment to determine if adding Bitcoin to the company’s treasury would be in the long-term interests of shareholders.   NCPPR’s initial foray into this topic received only 0.5% support at Microsoft last fall and was opposed by the proxy advisory firms.

Charitable Contributions 

Conservative investors have reformulated their charitable giving proposals, which in the past asked for a list of the recipients of corporate charitable contributions over a certain amount ($5,000 or $10,000).  This year’s versions are tied to religious discrimination.

• Employee philanthropic freedom: Inspire Investing, Investing with Purpose Capital and the Catholic Diocese of Forth Worth are asking a number of companies to issue a report evaluating how excluding religious charities from the company’s employer-gift match program impacts the risks of religious discrimination against employees.  The resolution received 1.9% at Apple and was withdrawn at Charles Schwab due to ongoing dialogues.  Other targets, including American Express, BlackRock and Wells Fargo, were able to omit the proposal for containing false or misleading statements.
• Discrimination in charitable giving:  Bowyer Research and the Oklahoma Tobacco Settlement
  Endowment Fund are asking several firms to assess how their charitable contributions and partnerships—particularly their sponsorship of the HRC—impact their risks related to religious discrimination against individuals based on their speech and religious exercise.  The proposal received 1.3% at Deere and 0.8% at Starbucks and is pending at lululemon athletica. 

Governance Issues

As in 2024, governance proposals are poised to outperform other categories of shareholder resolutions and will likely dominate the majority vote count.  Through March, four proposals already received majority support.  These included a board declassification proposal at Agilent Technologies, where the board made no recommendation on the measure, and two proposals to replace supermajority voting with a simple majority vote at Post Holdings and Hologic, where the board supported the measure.  A proposal to reduce the eligibility threshold for calling special meetings from 25% to 10% also garnered a majority vote at Sanmina.  

Last year’s successful campaigns are having an impact as well with a record number of companies (80 to date) proposing to retract their supermajority voting provisions, in many cases proactively rather than in response to a new shareholder proposal or a past vote.

Chevedden continues to be the most prolific sponsor of governance resolutions, as well those on compensation matters, such as severance pay, clawbacks and the retention of equity awards.  However, at least 17 of his resolutions have been excluded this year for procedural deficiencies, including at five companies where he neglected to include the proposal in his submission. 

TAB, which focuses on the food industry, is also expanding more into the governance arena this year.  So far, it has filed over a dozen resolutions on special meeting rights, independent board chairs, board independence, dual-class stock and the repeal of supermajority voting.  

Individual investor Chris Mueller has reemerged for a second year with over three dozen filings that largely center around concerns related to direct stock purchase plans.  These include offering ComputerShare’s QuickCert “print on demand” stock certificates, educating shareholders on how they can protect their securities against abusive short-sellers (such as the 2021 GameStop short squeeze), and demanding additional disclosures from the transfer agent on arbitrage exposure enabled through recurring direct stock plan purchases.

In all cases last year, Mueller’s submissions suffered from procedural defects and were omitted or withdrawn following company challenges.  So far, his 2025 resolutions are succumbing to the same fate and unlikely to reach ballots.

Special Meeting Improvement  

This year, Chevedden is presenting two versions of his resolutions to enhance shareholders’ special meeting rights: to adopt or reduce the stock ownership threshold to 10% or to simply drop any one-year holding period.  

The latter style of proposal was last introduced at four companies in 2023 and received only 11.6% in average support.   ISS opposed all of the resolutions, while Glass Lewis supported those where the company’s ownership requirement was above Glass Lewis’s preferred level of 10-15%.  According to DMI data, of the S&P 500 firms that allow shareholders to call special meetings (74%), 15% attach a one-year holding period to their ownership provision.

Director Resignation Policies

Early votes continue to show only modest support for proposals filed by the United Brotherhood of Carpenters calling for more rigorous director resignation policies, despite some tweaks from last year.  This year’s version requires that if a director fails his election for two consecutive years, his second tendered resignation would be automatically effective 90 days (rather than 30 days) after the vote is certified and that the policy be contained in the governance guidelines (rather than the bylaws).

Eight resolutions came to a vote in January and averaged 21.8% support—up from 17.6% for the eight voted in 2024—with the highest vote ever recorded at Sally Beauty Holdings (38.8%).   ISS has continued to oppose the proposals while Glass Lewis supports them.

Proposals in the pipeline for later meetings include an updated version at Supernus Pharmaceuticals which asks the company to adopt a governance guideline whereby after an initial failed vote, the director’s tendered resignation would be effective 90 days after the vote is certified.  The company is trying to omit the resolution as materially false and misleading because it has a plurality, rather than a majority, voting standard.  

Dual-Class Vote Reporting 

Faith-based organizations are filing a relatively new proposal at dual-class stock companies to report their vote results according to each class of stock in order to better monitor their responsiveness to the votes of non-insider shareholders.  The resolution received 13.1% at Tyson Foods and is pending at Meta Platforms, where last year’s proposal received 17.1% support.  ISS and Glass Lewis have been supportive of this initiative.  Interestingly, the resolutions are scoring lower votes than proposals calling for a recapitalization plan so that each share carries one vote, which garnered 26.3% at Meta Platforms in 2024 and 20% at Tyson Foods in 2020.

Reincorporations 

2025 was expected to be the year of “DExit” after a series of Delaware court rulings—the most prominent being the recission of Elon Musk’s $55 billion pay package—have called into question the state law’s longstanding predictability.

According to Bloomberg data, out of 40 proposed reincorporations between 2021 and mid-August, 2024, 15 companies sought to redomicile from Delaware to another state, primarily Nevada and Texas, which are vying to become legitimate alternatives^.17 Citing the increasingly litigious environment for companies with controlling shareholders, Dropbox, Meta Platforms, Pershing Square Capital Management, Simon Property Group, Trump Media & Technology Group and Walmart are considering or have made plans to leave the state.¹⁸  

To stave off an exodus, in late March amendments to the Delaware General Corporation Law (DGCL) were enacted that offer a process for boards to protect directors, officers and controlling shareholders from litigation over alleged conflicts of interest.¹⁹  These include providing safe harbors for conflict transactions, establishing a presumption of director independence based on national stock exchange standards, narrowing shareholder access to books and records, and defining a controller as owning at least a majority of the voting stock or one-third of the voting stock combined with managerial control over the affairs of the corporation.

The legislation has drawn sharp criticism from investor and public interest groups that it will reduce corporate insider accountability and lower safeguards for minority shareholders.  However, advocates contend that the amendments will restore balance, clarity and certain to Delaware law.

With many Investor Relations professional seeking ways to uncover new investors, Alliance Advisors decided to focus on the Biotechnology industry for a bit of analysis. We reviewed mutual fund holdings within our innovative investor intelligence platform, Invictus®, to understand which mutual funds were the most bullish supporters of the Biotechnology industry. The first thing that jumped out to us was The Capital Group Companies’ fund family dominated the largest industry capital increases. Their funds accounted for the eight largest increase by dollar value in the Biotechnology industry, though their investments in the industry were very concentrated. The largest purchase was made by the American Funds Growth Fund of America managed by a team of 12 portfolio managers. Overall, the funds’ investment in the Healthcare sector ranks third, representing 14%, trailing only Information Technology (24.5%) and the Consumer Discretionary (15.7%) sectors. The management team commented about the fund’s quarterly performance, “Health care holdings sold off with biotech companies declining the most,” suggesting that they took the opportunity to buy into the weakness. All told, the fund increased exposure to Biotechnology by 84%.

The fund with the largest holding of Biotechnology stocks was the American Funds Insurance Series – Growth Fund, holding 6 in all. The fund’s management team was most bullish on Illumina, accumulating 1.29 million shares to build its stake to 1.36 million shares. When delving deeper into this trend, the primary driver of the firm-wide exposure increase to Biotech stocks was its affinity for Amgen, which accounted for the largest purchase in four of the eight, followed by Illumina representing the largest purchase in three of the eight.

We next looked at the funds with the largest percentage increase to Biotechnology stocks, and a different trend appeared. When focusing on funds with updated holdings through end of January, Fidelity emerged as a firm who had multiple funds (3) in rank among the top eight.

The Fidelity Growth Discovery Fund made the largest increase in industry investment, adding >15%, primarily driven by increased holdings of Moderna. Co-managers Asher Anolic and Jason Weiner commented that their bias toward stocks of companies that can grow earnings faster than the market detracted from the fund’s performance versus the benchmark for the past six months. Specifically, their decisions to overweight the health care sector and underweight consumer discretionary significantly hurt the fund’s relative result. Asher Anolic elaborated on the fund’s investments in the health care sector saying, “In 2024, we added to the fund’s stake in health care stocks, making it the largest sector overweight by a wide margin. Health care stocks had a bumpy stretch the past year, outshined by high-growth megatrends, especially AI, and held back by pandemic-related headwinds and policy uncertainty in an election year. Still, innovation continued, particularly among biotech companies, and the pullback among certain stocks in the sector provided us with opportunities to establish or increase holdings in some promising names at attractive prices.”

Asher is also a portfolio manager of the Fidelity VIP – Growth Portfolio as well as the Fidelity Advisor Equity Growth Fund which were the other two Fidelity funds increasing exposure to the Biotechnology industry. Of the later fund, Asher commented that at the end of 2024, health care was by far the biggest sector overweight. Instead of making macroeconomic calls, “we plan to remain focused on areas of the market that are driven by salient secular trends we think can lead to long-term growth, such as growth-oriented segments of the technology sector and innovative businesses in health care.” Among the10 funds Asher manages, Gilead Sciences and BioNTech are the largest biotechnology stock exposures.

Alliance Advisors help hundreds of companies with shareholder intelligence, ranging from proxy advice and governance analytics to shareholder identification and targeting. Our ability to identify investment trends within the institutional investment community enables our clients to efficiently and effectively prioritize which existing and potentially new shareholders to engage.

On March 4, proxy advisor Glass Lewis announced that was implementing a new bifurcated approach to its proxy voting advice on diversity-related voting matters at U.S. public companies. It had advised clients on Feb. 18 that it was reevaluating its policies in view of the Trump administration’s January executive orders banning illegal diversity, equity and inclusion (DEI) policies in the federal government and the Attorney General’s directive to the Department of Justice to investigate, eliminate and penalize private companies that have illegal discrimination and preferences, including DEI.

Glass Lewis will continue to apply its 2025 U.S. benchmark and thematic guidelines on board elections and DEI-related shareholder proposals as is.¹ However, beginning March 10, where it recommends against directors for any diversity-related reasons, its proxy papers will carry a “For You Attention” (FYA) flag pointing clients to a supporting rationale that they can leverage if their preference is to vote differently from Glass Lewis’s recommendation.

Glass Lewis’s U.S. benchmark policy on board diversity is as follows:

• For Russell 3000 firms, it generally recommends against the nominating committee chair if the board is not at least 30% gender diverse and against the full nominating committee if there are no gender diverse directors.
• For non-Russell 3000 firms, it generally recommends against the nominating committee chair if there are no gender diverse directors.
• For Russell 1000 companies, it generally recommends against the nominating committee chair if the board has no directors from an underrepresented community. It will additionally oppose the nominating/ governance committee chair if there is no disclosure of individual or aggregate racial/ethnic minority board demographic information.

Glass Lewis believes its updated approach will allow it to support the varied diversity-related voting preferences of its institutional clients without the disruption that a hard policy change would pose in the middle of proxy season. The announcement follows Institutional Shareholder Services’ (ISS) decision to suspend its consideration of gender and racial/ethnic diversity factors in its voting recommendations on director elections beginning with its reports issued on or after Feb. 25.

¹ See Glass Lewis’s 2025 U.S. benchmark policies at https://resources.glasslewis.com/hubfs/2025%20Guidelines/2025%20US%20Benchmark%20Policy%20Guidelines.pdf and https://resources.glasslewis.com/hubfs/2025%20Guidelines/2025%20Shareholder%20Proposals%20&%20ESG%20Benchmark%20Policy%20Guidelines.pdf.

On Feb. 28, State Street Global Advisors (SSGA) released its 2025 proxy voting and engagement policies.¹ Because the document discusses SSGA’s approach to engaging with issuers, the revisions were heavily influenced by recent SEC guidance on Schedule 13D-G beneficial ownership reporting.² The new guidance lays out when engagement discussions by a holder of over 5% of the stock constitute “influencing control” of the company and thereby require reporting on a long-form Schedule D.

SSGA explained that rather than incorporate specific potential voting outcomes, its 2025 policy document sets forth what it believes are best practices for good governance at its portfolio companies and includes its viewpoints on what can protect and promote the long-term economic value of its clients’ investments.³

The 2025 guidelines essentially purge all explicit references as to when SSGA will vote against management proposals–director elections, compensation plans, mergers and acquisitions, auditor ratification, articles amendments and anti-takeover provisions—and replace wording throughout such as “we encourage” and “we support” with “we believe.” However, SSGA has largely maintained its transparency on when it will support or oppose shareholder advisory proposals. The upshot is that it will be harder for issuers to forecast how SSGA will cast its votes on proxy ballot items.

One notable change is an overhaul of SSGA’s board composition policy. It has removed its diversity requirement that there be a specific number or percentage of women and underrepresented groups on the board. SSGA has also done away with numerical limits for an individual director’s board memberships.

Key revisions to SSGA’s 2025 voting and engagement policies are discussed below.

Board Oversight

• Majority independent board: SSGA has added a new section codifying its view that a sufficiently independent board is key to effectively monitor management, maintain appropriate governance practices, and perform oversight functions to protect shareholder interests.
• Separation of Chair/CEO: SSGA believes boards are best positioned to choose their appropriate leadership structure. It has deleted its policy of voting against the chair or members of the nominating committee of S&P 500 and STOXX Europe 600 companies that have a combined Chair/CEO and no lead director.
• Refreshment and tenure: SSGA believes that a company’s average board tenure should generally align with the length of the business cycle of its industry. In assessing excessive board tenure, it will continue to examine the preponderance of long-tenured directors, board refreshment practices and classified board structures. It has deleted its policy of voting against directors if average board tenure is excessive. It has also removed its policy of voting against age and term limits.
• Director time commitments: SSGA believes the nominating committee is best suited to determine appropriate time commitments for directors. It will continue to examine if a company publicly discloses a director overboarding policy and the annual review process undertaken to evaluate director time commitments. SSGA has eliminated its policy of voting against the nominating committee chair of S&P 500 firms that do not disclose an overboarding policy. It has also removed its numerical board seat limits for non-S&P 500 firms.
• Board composition: SSGA has deleted its discussion of board diversity and its policy of voting against the chair or members of the nominating committee chair or the board leader if the company does not have at least one female director (or 30% gender diversity if in the Russell 3000 or other major index) and at least one director from an underrepresented group (if in the S&P 500 or FTSE 100). SSGA believes nominating committees are best placed for determining the most effective board composition to ensure there is a diverse range of backgrounds, experiences and perspectives, which may include skill sets, gender, race, ethnicity and age.

Board Accountability

• Oversight of strategy and risk: SSGA has deleted its policy of voting against responsible directors for a failure to demonstrate effective oversight in the areas of governance, climate risk management and human capital management. SSGA is maintaining the existing factors it considers when evaluating effective board oversight of risks and opportunities, which include the company’s long-term strategy, the oversight process, management accountability, and the disclosure of material information.
• Compliance with corporate governance principles: SSGA added a new section indicating that it will review governance practices at companies in selected indices for their adherence to market governance codes and/or stewardship principles.
• Proxy contests: When evaluating dissident nominees, SSGA has included as an additional factor the expertise of board members with respect to the company’s industry and strategy.
• Compensation and remuneration: SSGA has retained its discussion of the factors it considers when evaluating remuneration reports. It has deleted its policy of opposing remuneration reports where pay seems misaligned with shareholders’ interests, as well as its consideration of executive compensation practices when re-electing compensation committee members.
• Board meeting attendance: SSGA expects directors to attend at least 75% of their board meetings or provide an appropriate explanation for missing meetings. The policy no longer states that SSGA will vote against directors with poor attendance.
• Board responsiveness to advisory votes: SSGA has eliminated its discussion of board responsiveness to shareholder advisory votes. Previously, SSGA would vote against directors who were unresponsive to a majority-supported shareholder proposal in the previous year. It would also vote against the chair or members of the compensation committee if the company was unresponsive to shareholder concerns about compensation practices or if there was a high level of shareholder dissent against a management proposal on executive pay.

Disclosure

• Board composition: SSGA has removed its discussion of board composition disclosure, including its policy of voting against the chair of the nominating committee at Russell 1000 or FTSE 350 companies that do not disclose the gender, racial and ethnic composition of the board.
• Financial statements: SSGA has deleted its policy of voting against approval of a company’s financial statements if they have not been disclosed or audited, if the auditor opinion is qualified/adverse or includes a disclaimer, or if the auditor opinion is not disclosed.
• Sustainability and climate-related disclosures: SSGA has added a new section indicating that it looks to companies to provide disclosure on sustainability-related risks and opportunities relevant to their businesses in line with applicable local regulatory requirements and any voluntary standards and frameworks adopted by the company. It has removed its expectation that companies follow the Taskforce on Climate-related Financial Disclosures (TCFD) framework for climate-related disclosures. SSGA has also deleted its policy of voting against directors of firms in major indices, such as the S&P 500, if they fail to provide sufficient disclosure regarding board oversight of climate-related risks and opportunities, Scope 1 and 2 emissions, and climate-related targets, in accordance with the TFCD.
• Board and workforce demographics: SSGA expects companies to disclose the composition of the board and workforce. It has removed its policy of voting against the compensation committee chair of S&P 500 companies that do not disclose their EEO-1 reports.

Shareholder Protection

• Reorganizations, mergers, and acquisitions: SSGA has retained the factors it considers in evaluating mergers and structural reorganizations. It no longer singles out the factors that may trigger a vote against the transaction.

Shareholder Rights

• Virtual/hybrid shareholder meetings: SSGA has deleted its policy of voting against the nominating committee chair if the company does not adhere to certain virtual meeting best practices.
• Article amendments: SSGA has removed all references to how it casts votes with respect to unilaterally adopted/amended bylaws, supermajority voting provisions, and board size changes. It now states:
  • Bylaw amendments that may negatively impact shareholder rights should be put to a shareholder vote.
  • A majority voting standard is generally appropriate.
  • Companies should have a fixed board size or designate a range for the board size.
• Anti-takeover issues: SSGA has eliminated details related to how it may vote on poison pills and other anti-takeover measures. It now states that shareholders should have the right to vote on reasonable offers.
• Accounting and audit-related issues: SSGA has deleted its policy of opposing auditor ratification or the audit committee members if it has concerns with audit-related issues or if non-audit fees exceed 50% of audit fees. It has also deleted its consideration of auditor tenure when evaluating the audit process.

Shareholder Proposals

SSGA has retained its discussion regarding when it will support shareholder proposals, which include:

• If the request is focused on enhanced disclosure of the company’s governance and/or risk oversight,
• If the adoption of the request would protect the interests of SSGA clients as minority shareholders, or
• If the request satisfies SSGA’s assessment criteria for common disclosure topics.

In evaluating the shareholder proposal against SSGA’s assessment criteria, SSGA now states that it will review the company’s relevant disclosures against industry and market practice, including peer disclosures, relevant frameworks, and relevant industry guidance.

Other than companies receiving shareholder proposals related to political contributions, lobbying or trade association alignment, SSGA will no longer apply its disclosure assessment criteria to all companies or companies in certain sectors (such as oil and gas). Instead, its disclosure requirements will be based on whether the company has identified the issue underlying the shareholder proposal—climate; methane emissions; nature; human capital; diversity, equity and inclusion (DEI); pay equity; civil rights or human rights—as a material risk or opportunity to its business.

Additional changes to SSGA’s disclosure assessments include the following:

• Climate disclosure criteria: SSGA has deleted its expectation that all companies, including those in carbon intensive industries, provide public disclosures in line with the TCFD framework. In the case of high emitters, SSGA will continue to consider whether the company discloses any scenario planning, its plans to achieve any stated climate-related targets and timelines, and its incorporation of relevant climate considerations into its financial planning and/or capital allocation decisions. It no longer expects them to disclose Scope 1, 2 and relevant categories of Scope 3 emissions.
• Say-on-climate criteria: This section has been deleted.
• Human capital management disclosure criteria: SSGA is no longer including company efforts to advance DEI as a disclosure requirement. Instead, it expects disclosure of the board’s role in overseeing workforce demographics efforts.
• DEI disclosure criteria: SSGA has removed references to any company DEI-related goals and measures of board and workforce diversity based on gender, race, and ethnicity. Instead, its disclosure criteria include the demographics of the company’s board and global employee base (where permitted) and the extent that a diversity of skills, backgrounds, experiences, and perspectives factors into the board’s nominating process.

Engagement

SSGA now states that it does not seek to change or influence control of any portfolio company through engagement. It has also removed its discussion of using its “R-Factor” scoring system, which is based on the Sustainability Accounting Standards Board (SASB) Materiality Framework, to prioritize engagements. SSGA has additionally revised its criteria for engaging with investors who are running proxy contests, putting forth vote-no campaigns, or submitting shareholder proposals. Previously, SSGA limited discussions with a proponent to one, unless a follow-up was needed, and it welcomed the opportunity to review any proponent materials sent in advance of the discussion. SSGA now states that it will conduct such discussions at its discretion, which will be limited to investors who have filed necessary documentation with regulators.

¹ See SSGA’s executive summary and full 2025 voting and engagement guidelines at https://www.ssga.com/library-content/assets/pdf/global/asset-stewardship/summary-material-changes-ssga-proxy-voting-and-engagement.pdf and https://www.ssga.com/library-content/assets/pdf/global/asset-stewardship/proxy-voting-and-engagement-policy.pdf.

²See the SEC’s new Compliance and Disclosure Interpretations at https://www.sec.gov/rules-regulations/staff-guidance/compliance-disclosure-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#103.11.

³See SSGA’s “Introduction to the 2025 Proxy Season” at https://www.ssga.com/library-content/assets/pdf/global/asset-stewardship/introduction-to-2025-proxy-season.pdf.

A shift in the shareholder meeting arena has occurred, and it has taken most corporations by surprise.  If your company has recently experienced a short-notice cancellation of a meeting with a top-tier index investor, do not take it personally, as you are not alone.  Last week, Alliance Advisors noted that across its diverse client base, a trend emerged whereby BlackRock called off scheduled engagement meetings.  The move was cited as a reaction to the Securities and Exchange Commission’s walking back guidance that had allowed big index-fund investors to push influence on ESG-related topics with corporates.

In the past, BlackRock shared how they intended to use their sizeable positions in nearly every company to start discussing ESG concerns so as to minimize risk within their ever-growing portfolio. In an investor letter back in 2020, BlackRock stated that as a fiduciary to its clients, BlackRock believed it has an obligation to consider the impact of ESG issues in its investing. It went on to state, “Our investment conviction is that sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors. And with the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.” Around this time, BlackRock made a commitment to use voting power to compel companies to enhance their ESG reporting.  This might all now change.

This change by the SEC is primarily impacting the top-tier index investors.  Over the years, as index investing grew in popularity, so too did their coffers.  According to Investor’s Business Daily, Vanguard became the #1 owner of 330 stocks in the S&P 500 back in 2022. Further research indicated BlackRock was a remote second-top owner, ranking as the No. 1 investor in just 38 S&P 500 companies. ^1. Now, even if these indexers are not the #1 holder in other portfolio companies, they tend to hold over 5% regardless.  As such, the likes of Vanguard, BlackRock, and State Street are among the most frequent filers of 13G filings with the SEC.  This category of filing lies at the heart of this new guidance.

Since these passive investors were so heavily exposed to such a large swath of the S&P 500 and had little to no investment discretion over those holdings, a decision was made that leveraging their immense voting power provided a lever they had not possessed in the past – the influence of corporate strategy.  This is now called into question. As a refresher, when beneficial ownership of more than five percent of a voting class of a company’s equity securities registered under the Securities Exchange Act is accumulated, the person/entity is required to file a Schedule 13D with the SEC. Depending upon the facts and circumstances, the person/entity may be eligible to file the more abbreviated Schedule 13G in lieu of Schedule 13D. Schedule 13G is a shorter version of Schedule 13D with fewer reporting requirements.  The latest move by the SEC focuses on the 13G requirement of the investor as having no intention of influencing control of the issuer.

At the heart of the matter, here is what seems to be causing this pause of investor engagement…

Question 103.12

Question: Under what circumstances would a shareholder’s engagement with an issuer’s management on a particular topic cause the shareholder to hold the subject securities with a disqualifying “purpose or effect of changing or influencing control of the issuer” and, pursuant to Rule 13d-1(e), lose its eligibility to report on Schedule 13G?

Answer: The determination of whether a shareholder acquired or is holding the subject securities with the purpose or effect of “changing or influencing” control of the issuer is based on all the relevant facts and circumstances and will be informed by the meaning of “control” as defined in Exchange Act Rule 12b-2.

The subject matter of the shareholder’s engagement with the issuer’s management may be dispositive in making this determination. For example, Schedule 13G would be unavailable if a shareholder engages with the issuer’s management to specifically call for the sale of the issuer or a significant amount of the issuer’s assets, the restructuring of the issuer, or the election of director nominees other than the issuer’s nominees.

In addition to the subject matter of the engagement, the context in which the engagement occurs is also highly relevant in determining whether the shareholder is holding the subject securities with a disqualifying purpose or effect of “influencing” control of the issuer. Generally, a shareholder who discusses with management its views on a particular topic and how its views may inform its voting decisions, without more, would not be disqualified from reporting on a Schedule 13G. A shareholder who goes beyond such a discussion, however, and exerts pressure on management to implement specific measures or changes to a policy may be “influencing” control over the issuer. For example, Schedule 13G may be unavailable to a shareholder who:

• recommends that the issuer remove its staggered board, switch to a majority voting standard in uncontested director elections, eliminate its poison pill plan, change its executive compensation practices, or undertake specific actions on a social, environmental, or political policy and, as a means of pressuring the issuer to adopt the recommendation, explicitly or implicitly conditions its support of one or more of the issuer’s director nominees at the next director election on the issuer’s adoption of its recommendation; or
• discusses with management its voting policy on a particular topic and how the issuer fails to meet the shareholder’s expectations on such topic, and, to apply pressure on management, states or implies during any such discussions that it will not support one or more of the issuer’s director nominees at the next director election unless management makes changes to align with the shareholder’s expectations.²

So what does this mean for corporates?  Well, a couple of things come to mind.  Firstly, I have heard while attending past Vanguard & BlackRock conference presentations that these indexers tend to request meetings with only those corporates with whom they either have issues respective to their ESG strategies or were keen to gather more insights into potentially concerning areas.  These indexers liked to say that if a corporation did not hear from them, consider it lucky, as that means these indexers had no issues with the corporate strategy.  So, if one of these index investors has requested a meeting with our company but uncharacteristically asked to postpone/cancel that meeting, then you might just have more time to consider what was at issue with these investors, facing less pressure to address it on terms other than your management’s. Secondly, should these investors wish to continue engaging corporates in hopes of affecting changes to their ESG-related strategies, their 13G status would look to change, requiring them to file 13D, which is a more onerous filing requirement.

At Alliance Advisors help companies stay engaged with their shareholders year-round, not just ahead of annual meetings, or even just after quarterly results.  Alliance Advisors is uniquely positioned to help companies across all market capitalizations, industries, and sectors to understand shareholder activity (buying/selling) as well as keep investors attuned to the critical messaging about your company’s corporate strategy.

¹ – https://www.investors.com/etfs-and-funds/sectors/sp500-one-investor-is-the-largest-owner-of-two-thirds-of-u-s-companies/

² – https://www.sec.gov/rules-regulations/staff-guidance/compliance-disclosure-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting

In a surprise update, proxy advisor Institutional Shareholder Services (ISS) announced on Feb. 11 that it is halting consideration of gender and racial/ethnic diversity factors when making voting recommendations with respect to board diversity at U.S. companies.  The change will apply to ISS’s benchmark and specialty policies and will take effect for shareholder meeting reports published on or after Feb. 25.

Under its current benchmark policy, ISS will generally oppose the nominating committee chair if there are no women on the board and, in the case of S&P 1500 and Russell 3000 firms, if there are no racially or ethnically diverse directors.

ISS attributed the change to increased scrutiny of diversity, equity, and inclusion (DEI) practices in the U.S., including President Trump’s recent executive order on DEI.

(https://www.whitehouse.gov/presidential-actions/2025/01/ending-radical-and-wasteful-government-dei-programs-and-preferencing/).

See ISS’s press release here. 

Vanguard has published its updated voting policies for U.S. portfolio companies, which take effect in February 2025¹  Its most pronounced alterations deal with its policies on board composition — specifically board diversity — and on shareholder proposals on environmental and social (E&S) matters. Vanguard has also made minor changes to its policies on board independence, board responsiveness and director commitments, and has clarified the factors it considers when evaluating mergers, acquisitions and financial transactions.

Board Composition

Vanguard has largely gutted its discussion of board diversity in terms of explicit references to gender, race and ethnicity and replaced “diversity” with “personal characteristics.”  In evaluating board composition, Vanguard will continue to look to disclosures regarding the skills, background, experience and personal characteristics of each director, preferably in a matrix format.

Vanguard has deleted its policy of supporting shareholder requests to disclose the company’s approach to board composition, inclusive of board diversity.  It has also revised its policy of voting against the nominating/governance committee chair if the company’s board is not taking action to achieve board composition that is appropriately representative, relative to its market and the needs of its long-term strategies.  Vanguard will now take such action if, based on its research and/or engagement, the company’s board composition and/or related disclosure is inconsistent with market norms or market-specific frameworks.

Environmental/Social Proposals

Vanguard will continue to evaluate shareholder proposals on E&S issues on their merits and in the context of a company’s current practices and public disclosures.  However, it has underscored that it is not the funds’ role as passive investors to dictate company strategy or interfere with a company’s day-to-day management.  Its analysis of E&S proposals aims to strike a balance between avoiding prescriptiveness and providing a long-term perspective.

Reflecting the fact that it did not support any E&S shareholder resolutions in 2024, Vanguard’s revised policy simply states that it is likely to support proposals seeking disclosure of material risks and/or the company’s policies and practices to manage them over time.  It has eliminated its list of specific types of E&S proposals that it is inclined to support, which previously included requests for the following:

• Disclosure of Scope 1 and 2 emissions data and Scope 3 emissions, where material.
• Disclosure of climate change impacts.
• Disclosure of workforce demographics.
• Disclosure of board oversight of material DEI or other social risks.
• Disclosure of the company’s approach to board diversity and adoption of targets and goals.
• Inclusion of additional protected classes in a company’s employment and diversity policies.

Vanguard has additionally made minor changes to the following guidelines:

Board Independence

Vanguard votes against members of the nominating committee and all non-independent directors of a non-controlled company that does not maintain a majority independent board.  Previously, it would escalate its opposition vote to the entire board in the second year that it was not majority independent.  This has been revised to situations where the board is not majority independent over multiple years.

In the past, Vanguard followed the relevant stock exchange listing standards in defining director independence, except in the case of former CEOs, CEO interlocks or where Vanguard concluded that a director’s independence had been compromised.  Going forward, Vanguard will base its determination of director independence on company disclosures within the context of relevant market-specific governance frameworks (e.g., listing standards, governance codes, laws and regulations) supplemented by its own research and/or engagement.

Director Capacity and Commitments

Vanguard has altered its policy on overboarded directors by applying its limit of two public company directorships to any public company executive rather than just named executive officers.

Vanguard may vote in favor of an overboarded director due to company-specific facts and circumstances, but it will now also consider relevant market-specific governance frameworks.

Board Responsiveness

In the sections on board accountability and independent board leadership, Vanguard has revised its language regarding board responsiveness to shareholders.  It will look to whether a board has failed to adequately address or consider shareholder concerns on significant matters—rather than failing to respond to majority shareholder votes–in deciding whether to oppose directors or support a shareholder proposal calling for an independent board chair.

Executive Compensation

Vanguard has eliminated its policy and discussion related to annual and long-term bonus plans.  Its prior policy stated that it would vote against bonus plans that are excessive or unreasonable using criteria similar to its say-on-pay (SOP) analysis.

Mergers, Acquisitions and Financial Transactions

Vanguard has provided more details on the four key factors it considers when evaluating mergers, acquisitions and financial transactions:

• Valuation: Does the consideration provided in the transaction appear consistent with similar transactions (adjusting for size, sector, scope, etc.)?
• Rationale: Has the board sufficiently articulated how the transaction is aligned with the company’s long-term shareholder returns?
• Board oversight of the deal process: How did the board manage any potential conflicts of interest among the transaction parties and has the board provided sufficient evidence of the rigor of the evaluation process?
• The surviving entity’s governance profile: If the funds will be holders of any entities resulting from the transaction, will they retain rights that sufficiently protect shareholder interests?

¹See Vanguard’s 2025 policies here.