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

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.

Institutional Shareholder Services (ISS) has published its 2025 U.S. and Canadian benchmark policy updates which take effect for annual meetings on or after Feb. 1, 2025¹.

This year’s U.S. revisions are largely confined to poison pills, special purpose acquisition corporation (SPAC) extension proposals, natural capital/biodiversity shareholder proposals, and an adjustment to ISS’s qualitative review of performance-vesting equity awards.  ISS is also seeking additional feedback on the use of performance-vesting versus time-vesting awards in executive compensation for a potential policy update in 2026.

In Canada, ISS has clarified its policies on the independence of former CEOs and on charter and bylaw amendments giving the board discretion to hold virtual-only shareholders’ meetings.

These changes are summarized below.

U.S. Policy Updates

Poison Pills

ISS has provided more detail on the case-by-case factors it considers in deciding whether to recommend against directors (other than new nominees) if the board adopts a short-term (one year or less) poison pill without shareholder approval.  These include:

• The trigger threshold and other terms of the pill,
• The disclosed rationale for the adoption,
• The context in which the pill was adopted (e.g., the company’s size and stage of development, sudden changes in market capitalization, and extraordinary industry-wide or macroeconomic events),
• A commitment to put any renewal to a shareholder vote,
• The company’s overall track record on corporate governance and responsiveness to shareholders, and
• Other factors as relevant.

ISS notes that most poison pills in the U.S. are short term, with a duration of one year or less, and are rarely submitted for shareholder approval.  The update clarifies two factors that it had previously included in the “other factors as relevant” category:  the context in which the pill was adopted and the company’s overall track record on corporate governance and responsiveness to shareholders.  ISS is maintaining its existing policy on the adoption of a long-term pill without shareholder approval or when a pill is put to a shareholder vote.

Shareholder Proposals on Natural Capital/Community Impact Assessments

In recent years, there has been an increase in the number and variety of shareholder proposals focused on nature-related and community impact risks, such as biodiversity loss, deforestation and water pollution.

ISS takes a case-by-case approach to such proposals, with one factor being the disclosure of applicable company policies, metrics, risk assessment reports, and risk management procedures.   ISS has revised this factor to take into account the alignment of such disclosures with any relevant, broadly accepted reporting frameworks, such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Kunming-Montreal Global Biodiversity Framework (GGF).  This reflects the evolving focus of the shareholder proposals.

Performance Versus Time-Based Equity Awards

Under its current pay-for-performance (PFP) assessment of executive compensation, ISS considers a predominance of time-vesting (as opposed to performance-vesting) equity awards to be a significant concern at companies that exhibit a quantitative PFP misalignment.

According to ISS, a growing number of investors have expressed concerns with performance equity programs that are poorly designed or poorly disclosed, are highly complex, or use non-rigorous performance measures.  Some investors consider well-designed time-vesting awards to be preferable to performance-vesting awards.

In view of evolving investor views on this issue, ISS is adjusting its qualitative PFP analysis so that concerns with the design or disclosure of performance-vesting awards will carry greater weight.  Significant concerns may drive an adverse say-on-pay (SOP) recommendation at companies with a PFP misalignment.  ISS provided additional details on this change in a U.S. Executive Compensation Policies FAQ in mid-December².

ISS may adopt more significant policy changes in 2026 regarding the treatment of time-based equity awards and continues to welcome additional feedback on this topic.  Feedback can be submitted through the ISS Help Center³.

SPAC Extensions

The main purpose of SPACs is to identify and acquire a viable target within a specified timeframe (up to the “termination date”).  Failure to achieve this objective calls into question management’s ability to execute its primary objective.

This update codifies ISS’s current approach to SPAC extension recommendations.  ISS will generally support extension requests of up to one year from the original termination date, inclusive of any built-in extension options that were included in the original governing documents.  ISS will support multiple extension requests if they do not collectively exceed one year.

ISS notes that since the SPAC boom during the COVID-19 pandemic, there has been a proliferation of so-called “zombie SPACs”—namely, those that have experienced heavy shareholder redemptions that leave minimal funds in the trust account.  These SPACs have failed to consummate a business combination and have sought extensions to their termination dates, sometimes on multiple occasions and for multiple years.

Canadian Policy Updates

Articles or Bylaws Amendments for Virtual-Only Meetings

Currently, ISS supports management proposals to adopt or amend the articles/bylaws unless the changes negatively impact shareholders or diminish board oversight.  These include certain advance notice, quorum, alternate director and exclusive forum provisions; board authority to unilaterally alter the capital structure; and the ability of the board chair to break a deadlock in a director vote.

In the past, ISS has also opposed amendments that give the board discretion to hold shareholders’ meetings in a virtual-only format without a compelling rationale.  This is now codified in the policy.

Comments: Glass Lewis has made a similar policy change for 2025 whereby it expects companies to disclose their reason for choosing to hold a virtual-only shareholders’ meeting.  If a board fails to address legitimate, publicly expressed shareholder concerns regarding the meeting format, Glass Lewis may recommend against the chair of the governance committee or other accountable directors.

 Independence of Former/Interim CEO

ISS has clarified its policy on director independence in the case of a director who served as CEO or interim CEO of the company or its affiliates in the past five years.   After a five-year cooling off period, ISS may classify the director as non-independent based on certain circumstances.  These include management/board turnover, current or recent involvement with the company, whether the former CEO was a company founder or executive chair, the length of service with the company, and any related-party transactions or consulting arrangements.

Former CEO on Audit Committee

Currently, ISS recommends against a director who sits on the audit or compensation committee if he has served as CEO of the company or its affiliates within the past five years or as CEO of a company acquired within the past five years.   In conjunction with its policy update on former/interim CEO independence, ISS is clarifying it may consider such a director non-independent after the five-year cooling off period in certain circumstances.

Pay-for-Performance Evaluation

ISS has updated its PFP evaluation of S&P/TSX Composite Index companies and all management SOP proposals to indicate that it may elect to use the compensation of a non-CEO named executive officer, such as a former CEO or executive chair, if that individual’s compensation is regularly significantly higher than that of the CEO.  This would provide a more appropriate assessment of PFP alignment.

Board Gender Diversity

Currently, ISS requires the disclosure and interpretation of the circumstances behind an issuer falling below the policy’s board gender diversity thresholds before a policy exemption may be applied. ISS believes the change to remove this requirement, provides greater transparency and predictability as to how the policy will be applied and harmonizes the Canadian approach with the US market.

Board Racial/Ethnic Diversity

ISS notified the Canadian market of the inclusion of a racial/ethnic diversity standard for all TSX Composite Index boards in 2023, implemented the policy for TSX composite companies in 2024, and for 2025 updated the policy to remove the transitory language associated with the initial implementation year and addition of conditional exemptions to the final policy language.

¹ See ISS’s Executive Summary of Key Updates and Policy Development Process here
² See ISS’s U.S. Executive Compensation Policies FAQ here
³To submit feedback, go here

1. Introduction & Findings

Introduction

The TecDAX is an index composed of the 30 largest companies listed on the German stock exchange, which are connected to tech business. Due to their core business, investor expectation is that the relevant skills and expertise are represented at supervisory board level.

Challenge questions

1: Do TecDAX supervisory boards possess relevant technological expertise?

2: Do TecDAX supervisory boards in addition possess cyber/data security expertise?

Findings

• Only 19 of the 30 TecDAX companies have disclosed a skills matrix (=63%) of their supervisory board.

Considering these 19 companies only:

• 12 of 19 companies had director/s with IT, Digitalization or Technology skills (=63%).
• Two of 19 companies had director/s with explicit Data or Cyber security skills. (=11%).

Considering all 30 TecDAX companies:

• 12 of all 30 companies had director/s with IT, Digitalization or Technology skills (=40%).
• Two of all 30 companies had director/s with explicit Data or Cyber security skills (=7%).

2. Conclusion & Recommendations

Conclusion

• In the view several investors and proxy advisors, cyber risk management is also a supervisory board responsibility. (See “4. Selected Voting Policy Extracts”)
• Cyber & data security incidents are not limited to specific businesses. Therefore, we consider cyber & data risk management and supervision material for all companies. (See “5. Selected Cyber & Data Incidents«)
• Especially to companies in a technology-index, we had higher expectations than our findings show with regards to both, IT, Digitalization or Technology skills and Data or Cyber Security skills.

Recommendations

• Every company should publish a board matrix.
• Skills matrices should and be meaningful, and ideally be connected to additional board member information, such as for example year of birth or nationality.
• Skills matrices should always be up to date, including additional education and qualification achieved and easy to find, ideally on the relevant supervisory board internet page.
• Creating the own supervisory board matrix should also consider several examples from similar business companies and best-practice templates.
• The prior point is not only connected to companies without available skills matrix, also companies with one should check and eventually amend the existing one.
• From experience, these measures can mean that it becomes clear that a relevant skill is not represented in the own supervisory board.
• Until there will be upcoming supervisory board elections that would enable to fill such a gap with a new board member, there are measures to limit the risk from proxy advisors and investors in the meantime.

3.0 All TecDAX Companies

Skills Matrix Available

Skills Matrix Availability

• A skills matrix was available for 19 of the 30 TecDAX companies (63%). • The following analysis is based on these 19 companies.

IT, Digitalization, and Technology Skills

• Twelve of the 19 companies (63%) identified one or more directors with skills in IT, digitalization, or technology.

Data/Cyber Security Skills

• Only two companies (11%) explicitly mentioned directors with skills in cybersecurity or data security.

3.1 Electronic Components Sector

Skills Matrix Available

Skills Matrix Availability

• A skills matrix was available for all five Electronic Components companies (100%). • The following analysis is based on these five companies.

IT, Digitalization, and Technology Skills

• Four of the five companies (80%) identified one or more directors with skills in IT, digitalization, or technology.

Data/Cyber Security Skills

• None of the five companies (0%) explicitly mentioned a director with skills in cybersecurity or data security.

3.2 Hardware, Software & IT Services Sector

Skills Matrix Available

Skills Matrix Availability

• A skills matrix was available for five of the ten Hardware, Software & IT Services sector companies (50%). • The following analysis is based on these five companies.

IT, Digitalization, and Technology Skills

• Two of the five companies (40%) identified one or more directors with skills in IT, digitalization, or technology.

Data/Cyber Security Skills

• None of the five companies (0%) explicitly mentioned a director with skills in cybersecurity or data security.

3.3 Healthcare Sector

Skills Matrix Available

Skills Matrix Availability

• A skills matrix was available for three of the six Healthcare sector companies (50%). • The following analysis is based on these three companies.

IT, Digitalization, and Technology Skills

• Two of the three companies (67%) identified one or more directors with skills in IT, digitalization, or technology.

Data/Cyber Security Skills

• One of the three companies (33%) explicitly mentioned a director with skills in cybersecurity or data security.

3.4 Manufacturing & Services Sector

Skills Matrix Available

Skills Matrix Availability

• A skills matrix was available for four of the five Manufacturing & Services sector companies (80%). • The following analysis is based on these four companies.

IT, Digitalization, and Technology Skills

• Three of the four companies (60%) identified one or more directors with skills in IT, digitalization, or technology.

Data/Cyber Security Skills

• None of the four companies (0%) explicitly mentioned a director with skills in cybersecurity or data security.

3.5 Telecommunication Sector

Skills Matrix Available

Skills Matrix Availability

• A skills matrix was available for two of the four Telecommunication sector companies (50%).
• The following analysis is based on these two companies.

IT, Digitalization, and Technology Skills

• One of the two companies (50%) identified one or more directors with skills in IT, digitalization, or technology.

Data/Cyber Security Skills

• One of the two companies (25%) explicitly mentioned a director with skills in cybersecurity or data security.

4. Selected Voting Policy Extracts

Allianz Global Investors

• Allianz GI expect disclosures around cyber security governance, including key roles within the company responsible for cyber resilience of the business, and the board’s approach to ensuring robust oversight.

DWS

• Generally supportive of proposals asking investee companies to report on their environmental and social, (e.g., human rights, product safety, data security) practices, policies and impacts, including environmental damage and health risks resulting from operations, and the impact of environmental liabilities on shareholder value.

Glass Lewis Continental Europe Guidelines

• Companies and consumers are exposed to a growing risk of cyber-attacks.
• In instances where cyber-attacks have caused significant harm to shareholders we will closely evaluate the board’s oversight of cybersecurity as well as the company’s response and disclosures.

Legal & General Investment Management

• The vulnerability of a company’s IT systems can lead to a material financial impact and reputational damage.
• It should be integrated into the business’s control functions and (…) Cybersecurity should be a regular board agenda item.

New York State Common Retirement Fund

• Director attributes and skills should be relevant to a board’s capacity to effectively oversee risk, including operational, regulatory, climate-related and environmental, workforce, geopolitical, macroeconomic, financial, and cyber risks.

RBC Global Asset Management

• We believe that cyber security is a material risk in several industries and we will generally support requests for enhanced disclosure on how the board and senior management are overseeing, managing, and mitigating these risks.

Wellington Management

• Through engagement, we aim to compare companies’ approaches to cyber threats, regardless of region or sector, to distinguish businesses that lag from those that are better prepared.

5. Selected Cyber & Data Incidents

Any company may fall victim to a cyberattack.
These German examples highlight some of the most notorious incidents.

Aurubis in 2022

• Aurubis, an important company from Mining & Mineral sector was victim of an attack.
• Numerous systems at Aurubis sites had to be shut down but production was largely maintained.

Continental in 2022

• Automotive supplier Continental was the victim of a ransomware attack. • 40 terabytes of data were stolen.

Evotec in 2023

• Evotec, the Healthcare sector company, was affected by an attack in early 2024. • IT systems were shut down.
• Following, they were not able to provide their audited financial statements timely. • In line with the applicable rules, they were therefore excluded from the MDAX.

Rheinmetall in 2023

• Rheinmetall has important civilian and defense business. This attack was reported to have affected the civilian part (mostly automotive) only.
• In 2024, the company disclosed the costs of this attack of around 10 million Euros.

Varta in 2024

• Varta, the Batteries Manufacturing company, was affected by an attack in early 2024. • IT systems and production were shut down or reduced.
• Following, they were not able to provide their audited financial statements timely.
• In line with the applicable rules, they were excluded from the SDAX.

6. Methodology

Methodology

• We collected skills matrices from company websites, documents, and presentations, allocating a reasonable amount of time for research.
• Skills matrices not found within this timeframe were deemed non-existent, aligning with the practices of most proxy advisors and institutional investors.
• We considered only capital-elected board members, excluding employee representatives.
• Our analysis focused on the available supervisory board skills matrices for both, IT and data/cyber
• security.
• Due to the lack of standardized categories and clear terminology, disclosed skills in digitalization or technology were also considered as IT expertise, applying a principle of doubt. Similarly, cyber and data security were considered interchangeably.
• It’s important to note that IT skills do not automatically translate to cyber/data security expertise. Therefore, we only considered the latter when explicitly mentioned.
• We divided the 30 TecDAX companies also into five different sectors. These categorizations were decided according to FactSet and SASB Materiality Finder data.

1. Electronic components (5 companies)
2. Hardware, Software & IT Services (10 companies)
3. Healthcare (6 companies)
4. Manufacturing & Services (5 companies)
5. Telecommunications (4 companies)

7. Data Table

Proxy advisor Glass Lewis has published 2025 updates to its U.S. benchmark policy and its policies on shareholder proposals and environmental, social and governance (ESG) issues¹. The revised guidelines are effective for annual meetings on or after Jan. 1, 2025.

The changes, which are summarized below, largely address artificial intelligence (AI) – specifically board oversight and shareholder proposals. Glass Lewis also updated its discussion on the treatment of unvested awards under a change in control and clarified its approach to problematic executive pay factors, reincorporations, and board responsiveness to shareholder proposals.

Board Oversight of AI

In view of the rapid development and adoption of AI technologies, Glass Lewis has added a new discussion on its approach to AI-related risk oversight.

Glass Lewis believes that all companies that develop or employ the use of AI in their operations should provide clear disclosure concerning the board’s role in overseeing AI matters, including how they ensure that directors are fully versed on this issue. Oversight may be conducted by the entire board, specific directors, or a separate or existing board committee.

Glass Lewis will generally not make voting recommendations on the basis of a company’s oversight or disclosure of AI-related issues unless there is a material incident related to the company’s use or management of AI technologies. In such instances, Glass Lewis may recommend against the responsible directors if their oversight, response or disclosure concerning AI-related issues is insufficient.

Shareholder Proposals on AI

Glass Lewis has added a section to its benchmark policies on its approach to shareholder proposals dealing with companies’ use of AI in their operations and any ethical considerations. It evaluates such proposals on a case-by-case basis, taking into account the following:

• The proposal’s request,
• Disclosures provided by the company and its peers concerning their use of AI and the oversight afforded to
  AI-related issues, and
• Any lawsuits, fines or high-profile controversies concerning the company’s use of AI and whether the company’s management of this issue presents a clear risk to shareholder value.

Comments: In 2024, Glass Lewis supported seven out of nine AI-related shareholder proposals. Over half were requests for a transparency report on the company’s use of AI in its business operations, board oversight, and any related ethical guidelines. Glass Lewis also supported resolutions on AI-driven targeted advertising, the workforce implications of AI and automation, and amendments to audit/compliance committee charters to clarify their responsibility for AI activities.

Change-in-Control Provisions

Glass Lewis has clarified that in a change-in-control scenario, companies should provide a clear rationale for compensation committee discretion over the treatment of unvested awards.

Clarifying Amendments

Board Responsiveness to Shareholder Proposals

Glass Lewis has added a new section on board responsiveness to shareholder proposals to reflect its expectations when proposals receive significant (over 30%) but less than majority support, based on votes cast for and against. In these situations, Glass Lewis believes the board should engage with shareholders on the issue and provide disclosure of its outreach and how it is addressing shareholder concerns.

Reincorporations

Glass Lewis has clarified that it evaluates all proposals to reincorporate to a different state or country on a case-by-case basis, taking into account changes in governance provisions, material differences in cor- porate statutes and legal precedents, and relevant financial benefits. Under its current policy, Glass Lewis recommends against management-sponsored reincorporation proposals if the financial benefits, such as improved corporate tax treatment, are de minimis and there is a decrease in shareholder rights.

Glass Lewis has delineated the factors it examines when reviewing a proposal to reincorporate:

• If shareholders will gain or retain certain rights (such as the right to call special meetings, act by written consent or remove directors),
• If the new jurisdiction permits director and officer (D&O) exculpation and/or exclusive forum provisions,
• The fiduciary duties of directors, officers and majority shareholders under the new jurisdiction’s statutes,
• Material differences in corporate statutes, case law and judicial systems, and
• If the new jurisdiction is considered to be a tax haven.

Glass Lewis has also revised the governance factors it considers in reincorporation proposals. In addition to anti-takeover protections, board responsiveness to shareholders, company performance relative to peers, and pay-for-performance, Glass Lewis has added two additional factors:

• If the company has an independent board chair.
• If the company has a significant shareholder or is otherwise considered controlled.
• If a controlled company is seeking to change its domicile, Glass Lewis will closely evaluate how the independent board members came to their recommendation, if the controlling shareholder had any ability to influence the board, and if the proposal is also being put to a vote of the disinterested shareholders.

Comments: The revisions appear to have been driven by Tesla’s 2024 proposal to reincorporate from Delaware to Texas, which Glass Lewis opposed even though in the past it had supported a similar shift in domicile by other companies on the basis that shareholder rights would not be weakened². The factors relating to D&O exculpation and exclusive forums reflect Glass Lewis’ general distaste for such provisions

Approach to Executive Pay Program

Glass Lewis has clarified its discussion of say-on-pay (SOP) recommendations to emphasize that it takes a holistic approach to executive compensation programs. Few program features, on their own, would lead to an unfavorable recommendation. Glass Lewis does not utilize a pre-determined scorecard approach when considering individual features, such as the allocation of long-term incentives between performance-based and time-based awards. Unfavorable factors in a pay program are reviewed in the context of rationale, overall structure, disclosure quality, the program’s ability to align executive pay with performance and the shareholder experience, and the trajectory of the pay program resulting from changes made by the compensation committee.

Glass Lewis has delineated two additional program features that it views negatively in its review of SOP:

• Egregious or excessive perquisites.
• Adjustments to performance results that lead to problematic pay outcomes.

Glass Lewis has also indicated that it expects smaller reporting companies to provide sufficient information for shareholders to vote in an informed manner even though disclosure standards may condone their omission of key executive compensation information.

Comments: In its 2024 policy survey, Glass Lewis noted that in recent years the value of CEO perquisites has increased dramatically. Over half (55.8%) of investor respondents viewed perquisites as indicative of broader pay issues.

2024 Germany’s SDAX AGM Season Review – Key Takeaways

For the German small-cap index (“SDAX”) Alliance Advisors has analyzed all available voting results for AGMs held between 1 January 2024 until 31 July 2024, for all cases where also the recommendations from ISS and Glass Lewis were available. Where applicable, we also excluded non-Germany incorporated companies, as the voting guidelines and expectations from investors and proxy advisors can be different.

This meant that we could compare the voting results of 58 companies for the purposes of this report.

Executive Remuneration-Related Items

• For 56 different remuneration reports, ISS recommended 33 times against (=59%) and Glass Lewis 23 times against them (=41%). This also includes 19 times where both proxy advisors recommended against the same report (=34%). The lowest support of such an item was at 29.3% of the votes cast only, and the average support being 85.3% of the voted shares cast. Two companies had no voting on their remuneration report on the agenda.
• For the 22 different remuneration policies, the situation is similar. ISS recommended to vote against 12 times (=55%) and Glass Lewis recommended 4 times (=18%) against. This also includes 4 times where both were against the same report (=18%). The lowest support was 33.9% of the votes cast, and the average support 88.0%.Supervisory Board (Re-)Elections

A total of 59 directors have been (re-)elected to the supervisory board at the observed SDAX companies.

• Only 19 of these 59 candidates were female (=32%). ISS recommended against four of these candidates (=21%) and Glass Lewis against five (=26%). This also includes one case where both proxy advisors recommended against the same female director. The lowest support was 75.1% of the shares voted and the average support was at 92.2%.
• 40 of these 59 candidates were male (=68%). ISS recommended to vote against them 17 times (=48%) and Glass Lewis five times (=13%). This also includes four cases where both Proxy Advisors recommended against the same male director. The lowest support was 59.2% and the average support was at 90.5%.Shareholder Proposals

Within the observed companies, we have found eight relevant shareholder proposals. This means that these agenda items have been put on the agenda not by the management, but on shareholder request and a vote has been casted and/or disclosed.

• These eight cases have occurred at only three companies. One company had five such agenda items, another two and the last one only one such agenda item.
• ISS was against six of the shareholder proposal (=75%), and Glass Lewis was against seven (=88%).

If you would like to receive our suggestions on how to tackle your shareholder dissent prior to your next Shareholder Meeting, please contact us.

2024 Germany’s DAX AGM Season Review – Key Takeaways

For the German large-cap index (“DAX”) Alliance Advisors has analyzed all available voting results for AGMs held between 1 January 2024 until 31 July 2024, for all cases where also the recommendations from ISS and Glass Lewis were available. Where applicable, we also excluded non-Germany incorporated companies, as the voting guidelines and expectations from investors and proxy advisors can be different.

This meant that we could compare the voting results of 35 companies for the purposes of this report.

Executive Remuneration-Related Items

• For 35 different remuneration reports, ISS was three times against (=9%) and Glass Lewis eight times (=23%) against them. This also includes two cases where both were against the same report. The lowest support of such an item was at 58.3% only, and the average support 89.7%.
• At 12 different remuneration policies, the situation is similar. ISS was two times against (=17%) and Glass Lewis one time against (=8%) them. The lowest support was 40.4%, and the average support 85.0%.Supervisory Board (Re-)Elections

A total of 131 directors have been (re-)elected to the supervisory board.

• 50 of these 131 candidates have been female (=38%). ISS was against them 7 times (=14%) and Glass Lewisnot even one time. The lowest support was 76.4% and the average support was at 94.2%.

• 81 of these 131 candidates have been male (=62%). ISS was against them 28 times (=35%) and Glass Lewis9 times (=11%). The lowest support was 69.7% and the average support was at 93.5%. Discharges of Management & Supervisory Board Members

The discharge voting has an outstanding importance in Germany. First, the supervisory board members are not elected on an annual basis. Second, the management board members are appointed, but not elected.

We have separated the analysis for bundled discharge and individual discharge.

• For the bundled management board discharges, in all 18 cases ISS and Glass Lewis have been in favour. Thelowest support was at 92.8% and the average support at 97.4%.
• For the individual management board discharges, in all 102 cases ISS has been in favour. Glass Lewis was 90 times in favour and abstained on the remaining cases. The lowest support was at 93.0% and the average support at 97.8%.
• For the bundled supervisory board discharges, in all 19 cases both ISS and Glass Lewis have been in favour. The lowest support was at 86.1% and the average support at 98.7%.
• For the individual supervisory board discharges, in all 288 cases ISS has been in favour, and Glass Lewis against 22 cases (=8%). The lowest support was at 93.0% and the average support at 97.8%.

Virtual AGMs

Only one DAX company has renewed their authorization to hold a virtual AGM, limited to two years.

• Both ISS and Glass Lewis were in favour and the support was at 85.4%.

Authorizations limited up to two years were a common standard in 2023. Therefore, for the 2025 AGM season, it can be expected that many German companies will ask their shareholders to support a renewal of their authorization to hold virtual meetings, too. As already shown in 2023 – and according to our conversations with investors – mainly German and French investors will again oppose such as a matter of principle.

Interestingly, overall, our research for Austria showed investors to be less rigid.

Only one company limited the authorization until 2026, whereas five companies limited it until 2027, 10 companies until 2028 and two companies until 2029. Both ISS and Glass Lewis supported them all and none of them failed.

Transact Other Business

Whereas this is a standard item for example in Switzerland or Italy, it is somewhat new in Germany. ISS defines such agenda items as “Voting Instructions for Motions or Nominations by Shareholders that are not Made Accessible Before the AGM and that are Made or Amended in the Course of the AGM.“

The issue is quite simple. Certain ad hoc proposals can be requested during the AGM. If a shareholder representative has not been instructed for such an ad hoc proposal, the representative is not entitled to vote. Which means that the quorum for such a proposal could be very low. Thus, an investor (activist) with a relatively small stake could win the voting. To avoid it, Transact Other Business can be implemented into the AGM agenda. In that way, the quorum will not drop. Both, ISS and Glass Lewis can be expected to be against any such ad hoc proposal, thus in favour of the company.

• In the analysis-universe, two companies have implemented this agenda item. For both Brenntag and Bayer, proxy advisors backed the company.

What Is Next?

Shareholders are becoming more engaged and vocal, demanding transparency, accountability, and alignment with their expectations on issues like compensation or board diversity. Companies need to adapt by enhancing transparency, demonstrating strong corporate governance, and addressing shareholder concerns to maintain investor support. Boards play a crucial role in this process and are expected to proactively form a relationship with the relevant stewardship teams prior to the next Shareholder Meeting Season.

Whilst some institutional investors will only file their voting behaviour from votes submitted at Shareholder Meetings in 2024 in late Q3 of 2024, we anticipate that the engagement efforts of German corporates will have to address these concerns. The aim needs to be to provide further transparency and explanatory information to prove that the feedback of investors has been heard and incorporated.

If you would like to receive our suggestions on how to tackle your shareholder dissent prior to your next Shareholder Meeting, please contact us.