Conservative Investor Group, NLPC challenges recent SEC policies

This article includes excerpts from the original publication. To access the full text, go to National Legal and Policy Center.

Atkins’ SEC: Where Billionaires and Their Woke Corporate Allies Find Protection

by NLPC staff, 27th January, 2026.

With the Trump administration, we were promised a return to property rights and accountability. Instead, the President’s hand-picked SEC Chairman Paul Atkins has tried to mute shareholders with a muzzle professionally fitted by the same law firm that spends its days teaching “woke” CEOs how to ignore the people who actually own their companies.

The most egregious act of this new regime came on Friday. In a blunt update to its Compliance and Disclosure Interpretations, the Moloney-led staff declared they would now “object” to voluntary submissions of Notices of Exempt Solicitations to the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) platform. NESes are informative reports that NLPC has circulated to investors at various companies over the last few years to advocate our positions on proxy voting items like proposals and board nominees.

The SEC’s excuse for this crackdown is as insulting as it is transparent. They claim these filings are used for “generating publicity.” That’s an interesting conclusion, considering no one at the SEC within the cubicles under Moloney’s authority bothered to call us to ask us what our motives are. Since NLPC, along with a few others who we assume were not consulted, were singled out as “frequent filers” of the reports, you’d think someone at the SEC might be curious.

Instead, Moloney the mind-reader and his fellow seers jumped to their own biased conclusions and took action. Atkins and Moloney have decided that if you don’t have $5 million in stock, you don’t have the right to speak on the SEC’s digital public square. They are treating the EDGAR system—a public resource—like an elite country club where the dues are $5 million, and the only topic allowed for discussion is how great corporate management is doing. We are sure CEOs like Bank of America’s Brian Moynihan, Comcast‘s Brian Roberts, and General Motors‘ Mary Barra are ecstatic at this development.

The SEC likes to pretend this is about “saving the taxpayer money” following the government shutdown. This is a flat-out lie. The EDGAR system is automated. Organizations like NLPC pay thousands of dollars a year to outside filing services to format and upload our documents (itself a costly regulatory burden, like having to pay a CPA to do your taxes for what should be a simple process). But it costs the taxpayer literally nothing for us to hit “submit” to EDGAR.

At NLPC, we’ve seen this movie before. We know that when the powerful try to silence you, it’s usually because you’re telling a truth they can’t afford to hear. Atkins and Moloney can lock the gates of EDGAR, but they can’t stop the shareholders from realizing they’ve been sold out by the very people hired to protect them.

Weinberg Center’s Distorted Interpretation of Its Shareholder Proposals Survey Data: A Critical Examination

Sanford Lewis, Director and General Counsel
Khadija Foda, Associate Counsel
Shareholder Rights Group

The Delaware-based Weinberg Center for Corporate Governance recently released a report regarding shareholder proposals based on a survey it administered in late 2025. The survey collected responses regarding participation in, and perspectives on, the shareholder proposal process from just over 500 people, including 168 investors, 156 professional advisors, 52 public company representatives, and 28 corporate directors.

While the survey generated some useful data, unfortunately the report’s interpretive analysis is marred by errors and selective framing, despite being framed as an effort to “center on facts” that can inform shareholder proposal reform discussions. The report’s distortions risk materially misinforming such debates and therefore we believe that the SEC and other policymakers should not rely on the report’s narrative description of its findings when evaluating any changes to the shareholder proposal process. The report’s characterizations have already begun to appear in media coverage and public commentary, creating a risk that its purported “findings” will be repeated without independent examination of the survey instrument, the underlying data, or the methodological limitations that directly affect the validity of its conclusions.

This analysis is intended to make clear the survey report’s methodological weaknesses and embedded biases, enabling policymakers, practitioners, and commentators to assess its claims with appropriate skepticism.

The Survey’s Distorted Analysis of Costs

The survey asked companies for total costs of shareholder proposals over four years. However, the narrative in the report describes these four-year costs as “annual” costs, leading to distorted conclusions about purported “cost asymmetries” between proponents and issuers.

Question 31 of the survey asked company respondents to “[a]pproximate total direct costs your company incurred complying with Rule 14a-8 over the past four proxy seasons.” (emphasis added). However, the survey report characterizes the question and responses as “public company representatives responding to a question about annual direct costs to comply with Rule 14a-8” (emphasis added). The report’s author reiterated this misleading conclusion in a public blog post about the survey, stating “[c]ompanies, by contrast, encounter the system episodically and firm by firm, under heavier procedural and legal constraints, and with more external legal and compliance costs – reported to exceed $500,000 annually for some larger issuers” (emphasis added).

The largest group of company respondents, nine in total, reported total direct costs over four years between $100,000 and $250,000. Seven respondents reported less than $100,000, and six respondents reported between $250,000 and $500,000. Five respondents reported costs above $500,000, and four respondents reported spending more than $1 million.

Framing these amounts as annual costs in the narrative multiplies by four the figures reflected in the data. When divided across four proxy seasons, these figures imply approximate annual costs of $25,000 or less; $25,000–$62,500; $62,500–$125,000; more than $125,000; and more than $200,000, respectively.

Further, the highest reported figures—those exceeding $1 million—are concentrated among a very small number of companies (four) that, because of their scale and impact on the economy, receive the largest number of proposals. Treating those outliers as representative risks conflating proposal volume with the marginal cost of any single proposal. For large-capitalization issuers, expenditures in the hundreds of thousands of dollars are relatively immaterial. For example, for a company with $100 billion in annual profits, $100,000 is an extremely small expense, it represents just 0.0001% of its profits—equivalent to someone earning $100,000 spending ten cents. However, in reality, any reported numbers associated with the purported “cost” of the process often collapse under basic scrutiny and, across a U.S. public market capitalization of roughly $62 trillion, the cost of shareholder democracy is not even a rounding error.

One positive takeaway from the survey is that, even as framed in the report, the figures regarding aggregate costs to companies of shareholder proposals undercut more extreme claims circulating in policy debates, where the cost of a single shareholder proposal is sometimes asserted to be $500,000 or more. *

The survey figures should also be interpreted with caution. The board and management of public companies, who typically oppose most shareholder proposals, have strong incentives to overstate costs. The self-reported aggregate cost estimates related to shareholder proposals may blur the line between proposal-related expenses and routine governance and proxy-season costs. Reviewing shareholder proposals, engaging with investors, and preparing disclosures are routine board and management responsibilities. The wording of the survey and the reported estimates do not clearly separate what is incremental from core responsibilities of board and management.

Third, companies retain substantial discretion over how costly their responses to shareholder proposals become. According to respondents, outside counsel is the primary cost driver. Decisions about whether to seek no-action relief, how aggressively to detail their objections, and how heavily to rely on outside counsel all affect reported costs. Presenting those choices as fixed structural burdens overstates the degree to which costs are imposed by the rule itself.

Survey Results

Q60: The benefits of shareholder-sponsored proposals are:
Minimal – 34.07% (n=77)      
Modest – 27.88% (n=63)                                            
Substantial – 25.22% (n=57)                                      
Irreplaceable – 8.41% (n=19)                                     
Other (please specify) – 4.42% (n=10)                                     

Q61: Overall, do the benefits of Rule 14a-8 outweigh its costs?
Yes – 50.89% (n=114)
No – 27.68% (n=62)
Roughly equal – 6.70% (n=15)
Insufficient basis to judge – 10.71% (n=24)
Other (please specify) – 4.02% (n=9)

The survey’s failure to include questions about quantified benefits of shareholder proposals is further evidence of its imbalanced presentation of the costs and benefits of shareholder proposals. While the survey does ask respondents to assess the benefits of shareholder proposals in question 60, it does not ask for an associated dollar figure. Tellingly, in response to question 60, almost 62 percent of respondents selected benefits were in the range of “modest” to “irreplaceable”, whereas 34 percent selected “minimal” benefits as an option.[Q60] Moreover, almost 51 percent of respondents selected “yes” in response to question 61: “[o]verall, do the benefits of Rule 14a-8 outweigh its costs?”[Q61]

In this context, the survey commentary’s focus on the so-called “asymmetrical” costs imposed on companies by the process is telling. No analysis or estimate, symmetrical or otherwise, is provided regarding the value of the benefits.

Survey Question Bias: Framing “Legitimacy” to Exclude Non-Governance Proposals

Survey Results

Q47: Which, if any, of the following topics are outside the legitimate scope of proper shareholder proposals?
Micromanagement of ordinary business matters – 85.59% (n=202)
Not relevant to the specific company – 77.12% (n=182)
Primarily public policy issues – 48.73% (n=115)
Primarily political issues – 59.32% (n=140)
Primarily societal issues – 41.95% (n=99)
Primarily environmental issues – 35.59% (n=84)
Re-submission of topics that did not receive a majority of votes – 35.17% (n=83)
Other (please specify) – 7.63% (n=18)

The survey language and report contained evident bias against the legitimacy of so-called “environmental” or “social” proposals. Survey question 47 asked “[w]hich, if any, of the following topics are outside the legitimate scope of proper shareholder proposals?” and goes on to include the following response options. [Q47]

Q49: Which subject-matter areas are legitimate for shareholder-sponsored proposals?
Board accountability – 87.23% (n=205)
Executive compensation – 79.57% (n=187)
Takeover defenses – 68.09% (n=160)
Corporate risk – 60.00% (n=141)
Financial – 57.45% (n=135)
Strategic – 53.62% (n=126)
Environmental – 47.66% (n=112)
Social responsibility – 42.98% (n=101)
Civil or human rights – 38.30% (n=90)
Portfolio-wide or systemic risk – 37.02% (n=87)
Societal concerns – 29.36% (n=69)
Political matters – 23.40% (n=55)
Other (please specify) – 6.38% (n=15)
None of the above – 3.40% (n=8)

By grouping entire subject areas—such as environmental, societal, or political issues—together with procedural defects like micromanagement or lack of company relevance, this framing implicitly treats those subject matters as a flaw, regardless of context. The modifier of “primarily” may imply to some respondents that these are, perhaps, not addressing material or relevant issues for the company that receives them. Labeling an issue as “primarily societal” functions as a proxy for presumed immateriality or irrelevance, rather than reflecting an assessment grounded in the company’s actual operations, exposures, or governance practices. Notably, the framework does not include a corresponding category such as “primarily governance,” underscoring that these qualifiers are not neutral descriptors.

The companion question 49, which asks “[w]hich subject-matter areas are legitimate for shareholder-sponsored proposals?”, presents governance and non-governance subjects without similar qualifiers.[Q49] Regardless, the framing of response options is again problematic. Topics framed in conventional governance terms, such as “executive compensation” or “board accountability,” are comparatively uncontroversial, whereas labels like “social responsibility” are more contestable. For example, so-called “social” concerns could instead be framed as a governance issue of human capital risk oversight.

Even with this survey bias, survey respondent support for environmental, social, systemic risk, and political proposals remains substantial, often in the 30 to 50 percent range. Despite these results, the survey report concludes “[s]upport declines as topics move further from traditional governance and firm-specific economic oversight”, mischaracterizing both the nature of these proposals and the levels of respondents’ support. This interpretation also overlooks the well-known fact that many investors view environmental and social issues as potentially material investing issues at their companies because of the scope of risk involved to both short-term and long-term value. Investor support for proposals concerning these topics is consistent with empirical findings of positive correlations between ESG factors and corporate financial performance. For long-horizon investors, particularly diversified investors with broadly indexed or benchmark-tracking portfolios, support for such proposals may reflect a portfolio-level risk management strategy to manage systemic threats that can affect returns across the entire market. While the traditional “governance” topics receive the strongest support, characterizing other areas as marginal or illegitimate discounts a significant portion of respondents.

More fundamentally, the report’s reliance on “traditional governance” as a benchmark for legitimacy assumes that governance norms are fixed rather than evolving. Historically, many practices now viewed as core governance principles, such as routine financial disclosures, were once departures from prevailing norms. Movement beyond traditional categories is not inherently suspect but reflects adaptation to changing market conditions, risks, and expectations.

Moreover, the use of the term “political” in this context is itself contestable. Labeling a proposal as “political” does not reflect an objective characteristic of the proposal, but rather a judgment about the acceptability of its underlying premise. Issues are not inherently political or non-political; they may become politicized. Climate change, for example, is no more inherently political than board structure or executive compensation, yet it is routinely described as such because of opposition from actors with vested interests in the status quo.

The data regarding the level of support for environmental and social proposals among investors also reflects the range of investors responding to the survey. From the data reported, 75 of the 500 respondents to the survey have submitted at least one shareholder proposal within the last four years. In contrast, a little more than half of the investors who responded to the survey have not submitted shareholder proposals. It is well known that the largest investment organizations have little need to submit shareholder proposals because they already have access to board and management. The total numbers of respondents treating political, environmental, and social proposals as being “illegitimate” corresponds well with the number of non-proponent investors, public company representatives, and directors.  

Consensus on Federal Oversight, Not a Push to the States

The Weinberg Center for Corporate Governance is based in Delaware, and therefore a significant interest of the center relates to potential state policies that might restrict shareholder proposals or enable companies incorporated in the state to limit such proposals through restrictive bylaws. A recently enacted Texas law allows companies incorporated in the state to dramatically increase the threshold shareholdings required to submit a proposal. The current federal thresholds include $25,000 of shares held for a year or $2000 held for a longer minimum holding period of three years. In contrast, the Texas law would allow companies to block shareholder proposals for any shareholder with less than $1 million in holdings in the company. Since there is concern in Delaware about competition between the states for corporate incorporations, the subtext of recent convenings by the center is whether Delaware should compete by following the lead of Texas.

In his blog post about the survey, the author, Lawrence Cunningham, suggests that the survey results show “substantial disagreement over whether responsibility for the shareholder proposal process should remain primarily federal or shift toward states,” and the survey report states “[r]espondents split about whether to retain federal authority over the shareholder proposal process or devolve responsibility to states.”

This outcome was based on survey question 66 and results:

Q66: Preferred long-term approach:
Retain rule federally, even with policy variation over time – 37.44% (n=82)
Retain federally but fix SEC flexibility to limit variation – 32.42% (n=71)
Devolve to states for local definition and administration – 13.24% (n=29)
Permit each company to define its own proposal rules – 11.42% (n= 25)
Other (please specify) –  5.48% (n=12)

The survey results contradict this conclusion. Nearly 70 percent of respondents (153 out of 219) favor retaining Rule 14a-8 at the federal level when asked about their “[p]referred long-term approach”. While respondents disagree about how much discretion the SEC should have (some preferring flexibility, others favoring clearer limits), support for devolving authority to the states or allowing companies to define their own proposal rules remains a clear minority position. Only 13 percent, or 29 respondents, favored devolution to the states, and only 11 percent, or 25 respondents, favored permitting each company to define its own proposal rules.[Q66]

This pattern holds even among public company representatives and directors. While these groups express stronger preferences for predictability and constraint, they largely support continued federal administration rather than institutional relocation (“public company representatives (n=18) express a strong preference for retaining the rule federally but curbing SEC flexibility (66.7%, n=12)” and “[a]mong public company directors (n=17), a plurality favors constrained federal retention (41.2%, n=7)”). The real disagreement reflected in the data is not about who should administer the rule, but about how flexibly it should be applied.

Redefining Ownership Thresholds

The survey failed to adequately contextualize the series of questions regarding appropriate ownership thresholds for filing shareholder proposals, which may have skewed the results toward radically divergent outcomes for shareholder and company respondents.

The survey reports that shareholders tend to favor lower ownership thresholds for eligibility, while company representatives and directors prefer substantially higher dollar- and percentage-based requirements:

“When eligibility is framed in terms of ownership magnitude—whether measured in dollars (n=220) or percentages (n=223)—responses diverge sharply by role. Among shareholders, preferences cluster toward lower thresholds: for dollar-based tests, pluralities favor thresholds in the thousands (35.6%, n=16) or tens of thousands (31.1%, n=14); for percentage-based tests, the largest portions favor less than 1% (38.3%, n=18) or 1–2% ownership (19.1%, n=9).

By contrast, public company representatives and directors gravitate toward higher thresholds. Among company respondents, 41.2% (n=7) favor dollar thresholds of $1 million or more, and 61.1% (n=11) favor percentage thresholds of 1–2% or higher.”

Respondents were not provided the essential baseline of existing Rule 14a-8 eligibility standards, which currently allow shareholders with as little as $2,000 held for three years to submit proposals. Instead, question 52 asked whether proponents should be required to meet ownership thresholds in the thousands, tens of thousands, hundreds of thousands, or $1 million or more—most of which would represent significant increases over the existing thresholds.

Question 53 went further and asked whether eligibility should require ownership of less than 1 percent, 1 percent, 2–3 percent, 3–4 percent, or more than 5 percent of a company’s shares.

These percentage thresholds would effectively eliminate all shareholder proposals. At a typical public company, those levels would translate into tens of millions, or billions, of dollars. For example, acquiring even one percent of Amazon would require an investment well above $20 billion, a level that is presumably beyond the reach of all filers—including state pension funds and other institutional investors. Even the lowest of those options would eliminate nearly every shareholder proponent currently active in the market, curtailing almost all proposals, including those addressing matters the survey report characterizes as “legitimate”, such as proposals on board structure or executive accountability.

An Incomplete Account of Reported Satisfaction with the SEC Process

The report’s narrative distorts the sense of “dissatisfaction” with SEC administration of Rule 14a-8 by characterizing the results of the survey as demonstrating that “strong satisfaction” with the SEC is rare, rather than noting that most respondents find the process somewhat to very fair.

The author’s blog post summarizing the survey contends that “[o]ne of the report’s most striking findings is the breadth of dissatisfaction with the SEC’s administration of Rule 14a-8. Unlike views on the legitimacy of particular proposals, dissatisfaction with the process itself is widespread and consistent across respondents.” The report echoes this conclusion.

However, of the 166 respondents to question 38 “how fair is the SEC’s shareholder-proposal process to all parties?”, 20 selected “very fair”, 38 selected “fair”, 42 selected “somewhat fair”, 24 selected “unfair”, 33 selected “insufficient basis to judge” and 9 selected “other”.* In other words, a majority of respondents to this question, around 60%, said that the SEC’s shareholder proposal process was somewhat to very fair to all parties. In a process in which parties on both sides will often not get the outcome that they seek, some level of dissatisfaction with the fairness of the process on all sides should seem about par.

In fact, a more telling point from the survey is that there was broad agreement that the SEC’s no-action process is preferable to litigation. Respondents consistently cite faster resolution, lower cost, reduced adversarial risk, and the value for predictability of an SEC referee with subject-matter expertise.

Read together, these results support the sense that the system operates in a fundamentally fair manner—no one is entirely happy, but most prefer the system to the available alternatives. No doubt there is avoidable subjectivity and unpredictability, suggesting the potential value of modest reforms aimed at improving clarity, consistency, and administrability.

It should be noted that some of the changes implied by the report’s author, such as restricting the ability to file environmental, social, or other non-governance proposals would not resolve dissatisfaction with process administration. Instead, they would disenfranchise the portion of shareholders who view these issues as material to their investment strategies.

The Report’s Narrow Conceptualization of Shareholder Democracy

The report notes that most shareholder proposals never reach a vote, instead being resolved through withdrawal or the SEC’s no-action process and that when proposals do reach the ballot, they rarely receive majority support. This is characterized as inconsistent with “shareholder democracy.” That framing is misguided and risks reinforcing a broader narrative that marginalizes the shareholder proposal process, obscuring its role as a valuable structural mechanism that can help to surface potentially material issues meriting attention at companies and facilitates engagement between investors and the companies they own.

The reality is that the shareholder proposal process has always been an important equalizer among shareholders, democratizing the ability of blocs of smaller investors to engage with their companies in a manner that otherwise is only available to the largest investors. In practice, Rule 14a–8 is one of the only tools available to most shareholders, outside of the largest, to place items on the corporate agenda without incurring the extremely high costs and risks of proxy contests or litigation. Within this structure, the ability to raise issues, prompt engagement, and secure negotiated changes is itself a core democratic feature of the system, distinct from whether any individual resolution crosses a majority-vote threshold.

High withdrawal rates may indicate that proposals raise issues boards and management take seriously, particularly where there is meaningful investor support or where concerns can be addressed at relatively low cost. As Nell Minow has observed, agreements with proponents are more likely when companies anticipate broader shareholder backing. In that light, negotiated resolutions are not evidence of democratic failure but of the system working effectively to surface investor concerns that boards can effectively address, sometimes without needing to go to a vote.

Further, focusing on majority voting outcomes offers a distorted picture of how the shareholder proposal process actually operates in a heterogeneous investor environment. Shareholders differ widely in size, time horizons, and objectives. A process designed to surface issues, prompt engagement, and influence corporate behavior should not be evaluated by whether proposals win 50 percent plus one of the vote. Implying that a resolution only has an impact if it receives a majority vote is also flawed. Many companies see a vote of 25 percent plus as a significant signal from owners leading to changes in policy, practice, and disclosure.

The conclusion that the proposal process does not function as an example of shareholder democracy reflects an interpretive choice that downplays the important role of engagement, transparency, and negotiated change in producing private ordering through the proposal process.

Conclusion

We raise these points because the Weinberg Center survey has the potential to influence how the shareholder proposal process is evaluated and debated going forward. The Center’s director and author of the survey report, Lawrence Cunningham, has indeed expressed the view that the shareholder proposal process is ripe for reform to, among other things, limit the number of non-governance proposals that he regards as managerial distractions.

If the survey report’s findings are cited in policy discussions or reform efforts without making its striking biases and errors clear policymakers will be misdirected toward restricting important shareholder rights that are not based on “facts” but rather on a survey report’s clear biases.

As with any self-reported, self-selected group of respondents, the data collected is inherently limited in its scope, which is compounded by the lack of disaggregation in reporting of many survey responses by shareholder type, issuer size, or proposal activity. However, the larger foundational issues are flaws in the survey instrument compounded by the highly distorted narrative interpretation of the results.

The Weinberg Center, if it continues to conduct such research, would do well to invest in quality control and internal assessment from the perspective of different stakeholders, or alternatively, use a truly independent, credible and neutral third party that considers the diverse perspectives regarding the shareholder proposal process. Question framing, data collection choices, and interpretive errors and assumptions materially shaped the report’s conclusions. Uncritical reliance on these conclusions could lead to misguided policy outcomes—particularly in a regulatory and policy environment where shareholders’ rights to file proposals are already under attack. Accordingly, the SEC and other actors with meaningful influence over the shareholder proposal process should not rely on this report as a basis for policy or regulatory action.

References:

* See Testimony of Witness Ferrel Keel, Congressional Hearing “Hearing Entitled: Proxy Power and Proposal Abuse: Reforming Rule 14a-8 to Protect Shareholder Value” (Sept. 10, 2025), https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=410856 at 2:53:57.  In discussing costs of shareholder proposals Witness Keel stated “SEC has said it’s maybe upwards of $150,000. There have been other studies that put that at a top of 600,000” and providing additional testimony about “intangible” costs not captured by those figures.

* In the “other” category, eight respondents specified varied ratings over time and leadership and one respondent specified “practically random”.

Investment Organizations Letter to Chairman Paul Atkins re Rule 14a-8 Jan 14, 2026

January 14, 2026

Dear Chairman Atkins and Mr. Moloney,

Thank you for taking the time to meet with us on December 17, 2025 to discuss ourconcerns regarding recent changes to the Division of Corporation Finance no-actionletter process for shareholder proposals and potential changes by the Commission toRule 14a-8.We appreciate the opportunity for an exchange of perspectives. However, we continue to have concerns.

Specifically, changes to the shareholder proposal process conflict with the Commission's tripartite mission of promoting capital formation, investor protection, and maintenance of fair and orderly capital markets. The ability of shareholders to vote by proxy on proposals made by their fellow shareholders has long been an integral part of the U.S. corporate governance system. We believe that this private ordering processhas helped facilitate capital formation.

In the intervening days since we met, we have seen a number of companies avail themselves of the opportunity to notify proponents of their intent to exclude proposals without the benefit of the Division of Corporation Finance staff’s substantive no-action letter review process. We believe the elimination of the no-action letter process for shareholder proposals will deprive investors of the opportunity to vote on numerous valid proposals. It will also work against the interests of many issuers who are now unable to obtain the Rule 14a-8 guidance that the Division staff have historically provided.

Moreover, the new approach seems inconsistent with Rule 14a-8(k). That provision contemplates that the shareholder proponent may respond in writing to a company’s stated intention to exclude a proposal, the Commission staff will then “consider fully” the proponent’s submission, and the staff will then issue a “response”, presumably that either agrees or disagrees with the company or the proponent.

In addition, we have continuing concerns about the approach outlined by Chairman Atkins to the Division Staff in his October 9th, 2025 speech at the John L. Weinberg Center for Corporate Governance. The right of shareholders under Delaware law to vote on precatory proposals is well-established, long-standing and highly beneficial for both shareholders and issuers. Indeed, a recent study (copy enclosed) concludes that shareholder activism “can positively influence firm value” and can “meaningfully shape long-term firm performance.” See “The Value of Being Heard” at page 40. Moreover, theproposed approach conflicts with the Commission’s longstanding position that “mostproposals that are cast as recommendations or requests that the board of directors takespecified action are proper under state law” as memorialized in Rule 14a-8’s note to paragraph (i)(1).

We urge the Division to engage in a robust effort to collect information from all concerned market participants regarding the shareholder proposal process to guide its consideration in this area. For example, in 2018 the SEC staff held a series of roundtables on the proxy process with investor, issuer and asset manager perspectives. As part of these roundtables, the staff invited interested members of the public to provide written comments that were considered as part of the Commission’s 2019proposed revisions to Rule 14a-8. We believe that a similar information gathering process would be beneficial if further changes to the shareholder proposal process are contemplated.

In the spirit of promoting dialogue and to better inform the Commission about the manybenefits that have resulted from the private ordering process of the shareholder proposal rule, we would like to share the following resources for your consideration:

• Profs. Jill Fisch, Sarah Haan, Ann Lipton, and Amelia Miazad, Stockholder Proposals—Law and Policy Considerations, Harvard Law School Forum on Corporate Governance (December 9, 2025)

• Letter to Chairman Atkins from various state fiscal officers (December 3, 2025)

• Letter to Chairman Atkins from various investor organizations (November 5, 2025)

• Letter to Chairman Atkins from the Council of Institutional Investors (December 30, 2025)

• Letter to Chairman Atkins from the International Corporate Governance Network (October 12, 2025)

• Shareholder Rights Group, Interfaith Center on Corporate Responsibility, and USSIF, Shareholder Proposals: An Essential Right (2025)

• Letter to Chairman Atkins from the National Legal and Policy Center (December 18, 2025)

• Christina Sautter, Texas Corporate Reforms Silence Retail Shareholders—By Design, Bloomberg (January 6, 2026)

• Jasmijn Vandenberk, The Value of Being Heard: Board Responsiveness to Shareholder Proposals (September 11, 2025)

• For additional resources on the shareholder proposal process, please see the InvestorRightsForum.com website.

Thank you for taking our concerns into consideration. As representatives of investors who have submitted or voted upon many successful shareholder proposals at the companies in which we invest, we welcome the opportunity to provide you with further information and perspectives as you evaluate the benefits of the shareholder proposal process.

Respectfully submitted,

Brandon Rees, Deputy Director of Corporations and Capital Markets, AFL-CIO

Steven M.Rothstein, Chief Program Officer, Ceres

Josh Zinner, CEO, Interfaith Center on Corporate Responsibility

Sanford Lewis, Director and General Counsel,Shareholder Rights Group

Maria Lettini, CEO, US SIF

Danielle Fugere, President and Chief Counsel, As You Sow

The Value of Being Heard: Board Responsiveness to Shareholder Proposals

While prior research has primarily focused on the short-term market reactions to shareholder proposals and examined their outcomes in isolation, this study adopts a broader perspective by investigating how different levels of proposal responsiveness relate to firm value. We posit that the value effects of shareholder proposals are more pronounced when firms are open to dialogue with shareholders, whether publicly or privately. Using a sample of 9,764 shareholder proposals submitted to S&P 1500 firms between 2005 and 2021, we find that both voted and withdrawn proposals are similarly associated with higher firm value (measured by Tobin's Q) compared to omitted proposals. In the longer term, our results provide modest evidence that the positive effect persists primarily for withdrawn proposals, suggesting that the highest degree of responsiveness yields the greatest value creation. Furthermore, responsiveness appears to be more value-enhancing when proposals are submitted by multiple shareholders or in firms with CEO duality, indicating that both collective shareholder action and CEO power dynamics play a role. These findings imply that regulators, companies and shareholders should recognize that the shareholder proposal process can enhance firm value under certain conditions.

Read full paper

Letter to SEC Chairman Atkins from Council of Institutional Investors

Dear Chairman Atkins:

Access the full text here.

I am writing on behalf of the Council of Institutional Investors (CII). CII is a nonprofit, nonpartisan association of United States (U.S.) public, corporate and union employee benefit funds, other employee benefit plans, state, and local entities charged with investing public assets, and foundations and endowments with combined assets under management of approximately $5 trillion. Our member funds include major long-term shareowners with a duty to protect the retirement savings of millions of workers and their families, including public pension funds with more than 15 million participants – true and real “Main Street” investors through their pension funds. Our associate members include non-U.S. asset owners with more than $5 trillion in assets, and a range of asset managers with more than $74 trillion in assets under management.¹

We read with interest the Securities and Exchange Commission’s (SEC) “Statement Regarding the Division of Corporation Finance's Role in the Exchange Act Rule 14a-8 Process for the Current Proxy Season” (Statement). ² We recognize and appreciate the SEC’s “current resource and timing considerations following the lengthy government shutdown and the large volume of registration statements and other filings requiring prompt staff attention . . . .”³ We, however, are concerned that the Statement could diminish the use of an important shareholder right that for decades has led to improvements in corporate governance that benefit long-term shareholder value.⁴

The Preamble to CII’s membership-approved policies states:

CII believes effective corporate governance and disclosure serve the best long-term interests of companies, shareowners and other stakeholders. Effective corporate governance helps companies achieve strategic goals and manage risks by ensuring that shareowners can hold directors to account as their representatives, and in turn, directors can hold management to account, with each of these constituents contributing to balancing the interests of the company’s varied stakeholders. We consider effective disclosure to be accurate, prompt and useful information on company policies, practices and results. CII advocates for investor protection and robust capital markets, accomplished through a combination of private ordering and market-wide rules and regulations.

CII supports shareowners’ discretion to employ a variety of stewardship tools to improve corporate governance and disclosure at the companies they own. These tools include casting well-informed proxy votes; engaging in dialogue with portfolio companies (including with board members, as appropriate), external managers and policymakers; filing shareholder resolutions; nominating board candidates; litigating meritorious claims; and retaining or dismissing third parties charged with assisting in carrying out these activities.⁵

Consistent with that policy, CII believes that shareholder proposals, which are almost always nonbinding, are an essential and cost-effective tool for expressing the collective voice of a company’s shareowners on particular matters, and have made important contributions to corporate governance over the last 50 years. ⁶ Moreover, because “sound corporate governance is critical to long-term returns — and because poor governance can have a negative result on returns — CII members have a strong interest in seeing that shareholders can submit and vote on shareholder proposals that raise important corporate governance issues.” ⁷

In addition, CII has long publicly supported the view held by most market participants⁸ that the SEC’s Division of Corporation Finance (SEC Staff) is a fair arbiter for implementing the shareholder rule⁹ governing shareholder resolutions.¹⁰ And that “CII members take comfort in the fact that the SEC [S]taff is playing a role in terms of overseeing these proposals.”¹¹ What’s more, we believe corporations also benefit from the SEC Staff reviewing a corporation’s decision to include a shareholder proposal based on enumerated exclusions under Rule 14a-8 and providing an opinion on such exclusion through the no-action process.¹²

As you are aware, the Statement, without the benefit of public comment, ¹³ results in a fundamental change in how the SEC Staff approaches shareholder proposals under Rule 14a-8. ¹⁴As but one example, the Statement indicates that the SEC Staff will accept a company’s representation that it has a “reasonable basis” to exclude a proposal and won’t object to that conclusion. ¹⁵

We note that the Statement could potentially limit the ability of shareowners to file shareholder proposals that would otherwise meet the existing requirements of Rule 14a-8 and improve corporate governance and long-term shareholder value at the companies they own. We believe that good corporate governance practices could lead to special scrutiny of those corporate boards that may elect to respond to the Statement by omitting shareholder proposals from their proxy materials relying on the new process described in the Statement. We also believe that this special scrutiny could lead some institutional investors to holding some companies’ directors or boards accountable through (1) vote no-campaigns, ¹⁶or (2) litigation. ¹⁷ Thus, rather than alleviating pressure on corporate boards, the Statement could result in greater board-level instability through unnecessarily increasing issuers reputational¹⁸ or legal risks. ¹⁹

We also note that the Statement indicated that the new process “applies to the current proxy season (October 1, 2025 – September 30, 2026) as well as no-action requests received before October 1, 2025 to which the Division has not yet responded.”²⁰ We believe, for all the above reasons, the new process should be reconsidered and reversed as soon as practicable, but no later than the end of this proxy season.²¹

Thank you for your consideration of our views on this important matter. We would welcome the opportunity to meet with you and/or your staff to discuss our concerns in more detail and to answer any questions regarding this letter.

Sincerely, Jeffrey P. Mahoney General Counsel

References:

Council of Institutional Investors, Current CII Members, https://www.cii.org/current%20cii%20members.

1 Division of Corporation Finance, Securities and Exchange Commission, Statement Regarding the Division of Corporation Finance’s Role in the Exchange Act Rule 14a-8 Process for the Current Proxy Season (Nov. 17, 2025), https://www.sec.gov/newsroom/speeches-statements/statement-regarding-division-corporation-finances-roleexchange-act-rule-14a-8-process-current-proxy-season.

2 Id.

3 Letter from Jen Sisson, Chief Executive Officer, International Corporate Governance Network, to Paul S. Atkins, Chairman, Securities and Exchange Commission, et al. (Dec. 10, 2025), https://www.icgn.org/sites/default/files/2025-12/30.%20ICGN%20letter%20to%20SEC%20on%20shareholder%20proposals.pdf.

4 Council of Institutional Investors, Policies on Corporate Governance – Preamble (last updated Mar. 11, 2025), https://www.cii.org/corp_gov_policies#intro.

5 Letter from Kenneth A. Bertsch, Executive Director, Council of Institutional Investors, et al. to Vanessa A. Countryman, Secretary, Securities and Exchange Commission (Jan. 30, 2020), https://www.cii.org/Files/issues_and_advocacy/correspondence/2020/20201030%2014a8%20comment%20letter%20FINAL.pdf.

6 Daniel M. Stone, SEC Suspicion of Shareholder Proposals Hurts Corporate Democracy, Bloomberg Government (Dec. 22, 2025).

7 Brief of the Council of Institutional Investors as Amicus Curiae in Support of Plaintiffs’ Motion for Summary Judgment, ICCR v. SEC, No. 1:21-cv-1620-RBW (D.D.C. Sept. 24, 2021), https://www.cii.org/files/issues_and_advocacy/legal_issues/17_Brief_final.pdf.

8 Amendments to Rule 14a-8 Under the Securities Exchange Act of 1934 Relating to Proposals by Security Holders, Exchange Act Release No. 20091, 48 Fed. Reg. 38218 (Aug. 23, 1983).

9 Shareholder Proposals, 17 C.F.R. § 240.14a-8 (Feb. 18, 2025), https://www.ecfr.gov/current/title-17/chapter-II/part-240/subpart-A/section-240.14a-8.

10 Council of Institutional Investors, Leading Investor Group Defends SEC as Fair Arbiter of Shareholder Proposals as ExxonMobil Goes to Court (Feb. 8, 2024), https://www.cii.org/feb82024-press-release-exxon.

11 Roundtable Discussions Regarding the Federal Proxy Rules and State Corporation Law, Statement of Ann Yerger, Council of Institutional Investors, before the Securities and Exchange Commission (May 7, 2007), https://www.sec.gov/spotlight/proxyprocess/proxy-transcript050707.pdf.

12 Andrew Ramonas & Drew Hutchinson, SEC Prepares Plan to Curb Company Reporting, Investor Proposals, Bloomberg Government (Dec. 29, 2025).

13 Gina Gambetta, Uncharted Territory: How Are Investors Preparing for the 2026 AGM Season?, Responsible Investor (Dec. 17, 2025), https://www.responsible-investor.com/uncharted-territory-how-are-investors-preparing-for-the-2026-agm-season/.

14 ICCR, Statement on Recent Policy Change at the SEC (Nov. 20, 2025), https://www.iccr.org/iccr-statement-on-recent-policy-change-at-the-sec/.

15 SEC to Companies: You’re on Your Own (Sort Of) Under Rule 14a-8, Winston & Strawn Blog (Nov. 24, 2025), https://www.winston.com/en/blogs-and-podcasts/capital-markets-and-securities-law-watch/sec-to-companies-youre-on-your-own-sort-of-under-rule-14a-8.

16 Public Companies in Uncharted Territory Following SEC Announcement It Will Step Back from Responses on Most Shareholder Proposal No-Action Requests, White & Case Alert (Nov. 24, 2025), https://www.whitecase.com/insight-alert/public-companies-uncharted-territory-following-sec-announcement-it-will-step-back.

17 Proposal Free-for-All Sets In as Early Filers Contend with SEC Withdrawal, Agenda, Gallagher (Dec. 15, 2025).

18 Kevin M. LaCroix, Guest Post: Is the SEC Signaling the End of ESG Shareholder Proposals?, D&O Diary (Dec. 16, 2025), https://www.dandodiary.com/2025/12/articles/securities-regulation/guest-post-is-the-sec-signaling-the-end-of-esg-shareholder-proposals/.

19 Leland S. Benton et al., SEC Division of Corporation Finance Announces Major Changes to Rule 14a-8 Shareholder Proposal Process, Morgan Lewis LawFlash (Nov. 19, 2025), https://www.morganlewis.com/pubs/2025/11/sec-division-of-corporation-finance-announces-major-changes-to-rule-14a-8-shareholder-proposal-process.

20 Letter from Elizabeth A. Steiner, Oregon State Treasurer, et al. to Paul S. Atkins, Chairman, Securities and Exchange Commission (Dec. 3, 2025).

21 Letter from Jen Sisson, Chief Executive Officer, International Corporate Governance Network, to Paul S. Atkins, Chairman, Securities and Exchange Commission, et al. (requesting reconsideration of the Statement).

Access the full text here.

Conservative National Legal and Policy Center Writes to SEC Chairman Opposing Recent Changes

This post excerpts a letter written by The National Legal and Policy Center to Chairman Paul Atkins, Securities and Exchange Commission. Access the full text here.

Dear Chairman Atkins:

The National Legal and Policy Center (“NLPC”) writes to express our interest in working with you, the Commission, and staff on any future rulemaking, guidance, or other actions relating to the shareholder proposal process and broader proxy system. As a shareholder advocate that has long used Rule 14a-8 to challenge politicized corporate behavior, we offer a perspective that is both pro-market and skeptical of the “stakeholder” model of corporate governance.

Introduction

The SEC’s mission is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.” To these ends, it has long played a central role in structuring the proxy process and protecting the rights of shareholders as owners. We respectfully submit that preserving a robust, predictable shareholder proposal regime is fully consistent with that mission, and that some of the recent ideas and developments surrounding the proposal process risk undermining it.

We understand that further action regarding shareholder proposals is under consideration by you and the Commission. We welcome discussion of how to reduce abuse and clarify fiduciary duties. However, we are concerned that reducing the SEC staff’s role in the no-action process, encouraging aggressive ownership thresholds, or casting doubt on the legitimacy of non-binding proposals could unintentionally weaken market-based accountability and drive political conflict into more heavy-handed regulatory channels

Shareholder Proposals Are a Capitalist Tool

From a conservative perspective, Rule 14a-8 is best understood not as a vehicle for stakeholder capitalism, but as a property-rights mechanism. It gives owners of a corporation a low-cost way to raise emerging risks and concerns with management, and test those concerns in the marketplace of investor opinion through a shareholder vote. Properly constrained, this is an explicitly capitalist institution. It is voluntary, firm-specific, and mediated by the discipline of capital markets. It is also qualitatively different from political regulation. When a shareholder proposal is adopted or prompts a negotiated change, that outcome arises from private ordering within a particular company, not from a government mandate imposed on the entire economy.

For that reason, shareholder proposals are a constructive alternative to more intrusive political interventions. If owners are denied meaningful tools to discipline management on social, political, or ESG matters that affect the firm, the likely result is more legislative and regulatory activism, not less. We believe conservatives should prefer disputes to be resolved within the framework of corporate law and capital markets rather than by sweeping federal mandates.

****

Conclusion

For these reasons, we respectfully urge the Commission not to weaken the shareholder proposal process or to invite state-law experiments that would, in practical effect, curtail the ability of ordinary investors to raise concerns with management. A clear and stable federal baseline under Rule 14a-8—one that recognizes the legitimacy of precatory proposals, maintains an accessible threshold for smaller but bona fide shareholders, and resists efforts to reclassify ordinary owner oversight as “improper” under state law—is fully consistent with the Commission’s mission to protect investors and promote fair, orderly, and efficient markets. It is also the approach most compatible with a conservative, market-oriented vision of corporate governance, in which disputes over politicized corporate behavior are worked out within firms and among owners, rather than through sweeping political or regulatory mandates.

We would welcome the opportunity to discuss these issues further with you, your fellow commissioners, and your staff, and to provide concrete examples of how the shareholder proposal process has enabled NLPC and similarly situated investors to check managerial excesses, challenge uneconomic ESG initiatives, and refocus companies on their core duty to shareholders. We are confident that, with careful and viewpoint-neutral refinements, the Commission can address concerns about abuse and complexity without sacrificing a vital mechanism of owner oversight.

Sincerely,

Peter Flaherty, Chairman.

This is an excerpt from the text, you can access the full letter here.

ICGN Letter to SEC on Shareholder Proposals

Letter from Jen Sisson, CEO of ICGN on 10th December 2025

Dear Chairman Atkins, and Commissioners Uyeda, Peirce and Crenshaw,

Subject: Comments on the SEC Statement on Rule 14a-8 - No-Action Requests

The International Corporate Governance Network (ICGN) would like to offer its perspective on the SEC Division of Corporation Finance statement, published on November 17, 2025, regarding no-action requests under Rule 14a-8.

Led by investors responsible for assets under management of over US$90 trillion, ICGN promotes high standards of corporate governance globally. Our members – both asset owners and asset managers – have significant exposure to the U.S. market.

We are deeply concerned by the Division of Corporation Finance’s announcement that it will not substantively respond to most Rule 14a-8 no-action requests for the 2025–2026 proxy season. We are concerned that the narrowing of shareholder proposal rights appears part of a broader shift that reduces the avenues through which investors can engage with portfolio companies, compounded by recent changes to interpretations of Section 13D and 13G. Taken together, these developments risk adding tensions between company owners and management, and diminish investor confidence in U.S. corporate governance standards and thereby weaken the appeal of U.S. capital markets globally.

Why shareholder resolutions are an important mechanism

Shareholder resolutions are a vital mechanism for company owners to surface ideas and raise concerns with company management and all shareholders. They have been a key driver of corporate governance improvements in the United States. For example, shareholder resolutions have been successful in promoting annual director elections and establishing simple majority vote requirements. Shareholder proposals helped these good governance practices to become norms, based on a market-led approach, without regulation or standards. Hundreds of constructive dialogues, resulting in increased corporate transparency and improved governance, have been facilitated by shareholder resolutions at minimal cost to issuers and investors.

Each investor has their own approach to decide how to vote on a shareholder resolution. Across the market, resolutions that obtain significant shareholder support tend to be those that are not overly prescriptive for company management and that concern issues investors deem financially material for the success of the company. Shareholders tend to support proposals that can catalyse improvements in governance, reporting, risk management, and long-term strategic thinking. Academic research shows that governance provisions restricting shareholder rights, such as limits on the ability to propose resolutions, are associated with lower firm valuation and weaker stock performance.

Shareholder resolutions can help provide accountability when other mechanisms fail. They also signal investor sentiment to the company. High support levels for a proposal can drive rapid governance improvements, but even modest levels of support can prompt constructive engagement between boards and investors.

Why the SEC No Action Process should be protected

ICGN believes that the ability to file shareholder proposals is a fundamental ownership right.

For decades, issuers and investors have relied on SEC staff guidance, and although purely advisory, it has served as an independent, impartial, trustworthy check that provided procedural clarity and curbed potentially arbitrary exclusion of shareholder proposals by boards of directors.

According to the Statement, a company will be able to obtain an SEC ‘no-objection’ based solely on the company’s unqualified representation that it has a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8, SEC guidance and/or judicial decisions. Without conducting an evaluation of the adequacy of the representation, the SEC’s staff will not object to the company omitting the proposal from the ballot.

By stepping back from the process, the SEC risks significantly diminishing shareholder voice and reducing important checks and balances that exist to protect the long-term interest of the company and its owners. Without the traditional buffer of a staff no-action determination, boards of directors may face increased opposition from investors concerned that relevant shareholder proposals may have been omitted without a valid reason. Furthermore, without SEC staff guidance, companies may be exposed to increased litigation, as proponents of shareholder resolutions that have been omitted by companies may seek judicial clarification in the absence of SEC staff assessment.

We regret to hear that the SEC intends to withdraw from substantive 14a-8 review. Rule 14a- 8 has facilitated a critically important private ordering process - but private ordering only works with regulatory oversight.

A call for the SEC to reconsider its Statement and launch a public consultation

ICGN recognises the resource pressures the Division faces, but the shareholder proposal process plays a vital role in surfacing material risks and enabling constructive investor- company dialogue. We believe that the existing process is well understood and has been supportive of well-functioning markets, and therefore we strongly support the SEC No Action Process being protected.

The Division’s independent review has historically provided transparency, predictability and a neutral reference point for both companies and investors. Removing or significantly narrowing that role risks eroding investor voice, imposing disproportionate burdens on minority and smaller proponents, and increasing costly litigation. As we believe this is not in the interest of efficient and fair capital markets, we respectfully ask that the SEC reconsider its statement.

We are concerned that this shift is occurring through staff announcements and public remarks, rather than through the formal rulemaking process. As highlighted in our 20 October letter, we encourage the Commission to consider returning to public consultation processes on matters that substantively alter policy, following a formal notice-and-comment process under the Administrative Procedure Act. We believe that the absence of public consultations on important announcements which may negatively affect shareholder rights, risks lowering the quality of the highly regarded due process and governance standards in the United States, thereby presenting a risk to the attractiveness of U.S. capital markets and impact the valuation of U.S. companies by investors.

We would welcome the opportunity for further dialogue on these issues. Should you have any question, please contact Severine Neervoort, Global Policy Director at policy@icgn.org.

To learn more, please visit ICGN’s Website.

SEC chair’s remarks on the future of the U.S. shareholder proposal process are “deeply concerning”

Freedom to Invest

U.S. Securities and Exchange Commission Chair Paul Atkins’ recent comments pointing to the end of the shareholder proposal process are “deeply concerning,” as such changes would be an abdication of the agency's investor protection mandate.  

The practice of filing shareholder proposals has a long history, gaining prominence in 1942 with the introduction of a version of SEC Rule 14a-8, which investors and companies rely on to ensure a fair and balanced process. Proposals are almost always non-binding, even when they receive a majority supporting vote, meaning companies are not legally required to act on them. Still, they have led to the broad adoption of governance best practices and risk mitigation policies essential for long-term value creation.  

Atkins’ recent statements in Delaware indicate that the agency will seek to reform the shareholder proposal process dramatically. 

Andrew Collier, Director, Freedom to Invest, said: 

“The shareholder proposal process has been a cornerstone of investment stewardship and good governance for decades. The process helps protect the retirement savings of tens of millions of Americans from financial risks that threaten corporate bottom lines. If the SEC intends to break longstanding precedent and deprive shareholders of their traditional input into corporate decision-making, then the agency should solicit public comment. The SEC should not make dramatic shifts in policy without allowing investors to voice their practical and economic concerns as fiduciaries acting in the best interests of clients and beneficiaries”.

Freedom to Invest brings together investors, companies, and other stakeholders to champion the freedom to consider all material financial risks in their decision-making. Learn more here.

Advisory Proxy Resolutions Are More Important Than Ever

Authors- Karl Sandstrom and Bruce Freed

U.S. Supreme Court Justice Anthony Kennedy observed in the Citizens United decision that shareholders of publicly traded companies could employ the procedures of corporate democracy to ensure that shareholder value was not diverted to political causes and candidates that they found objectionable.  The proxy process is the principal way shareholders can exercise that power.

Investors have used the process to file resolutions seeking disclosure and board oversight of corporate political spending and have met with remarkable success: Political transparency and accountability are becoming the norm among publicly traded companies.

Today, the right of shareholders to register their opinion about companies’ use of their investment dollars for political causes is at risk.  Securities and Exchange Commission Chairman Paul Atkins and the Trump administration are pushing to eliminate proxy resolutions that are advisory, which would be a fatal blow to resolutions calling for political transparency and board oversight.

Proxy access is critical to protecting investors.  Investors should not be deprived of the ability to recommend to a company procedures that safeguard their investment and align their interests with the company’s. Investors simply should not be put at risk of having shareholder value used to advance political causes and candidates without disclosure and approval by elected directors.

Broad transparency and accountability by major companies are products of proxy access.  Without proxy access, shareholders would not be able to take advantage of Justice Kennedy’s observation and would be left blind to a company’s political engagement and compelled to underwrite speech that they find objectionable.

Transparency and accountability serve as a check on corporate managers using corporate resources to advance their own personal political preferences.

Transparency and board oversight also serve as a safeguard against corruption.  Recent experience is replete with examples of corporate officers using corporate resources to corruptly engage in politics.  Corruption puts at risk a shareholder’s investment and financial fortune at risk.

The S.E.C.’s proxy access rules have been central to the Center for Political Accountability’s  successful collaboration with shareholder advocates in engaging companies to improve disclosure and oversight of their election-related spending. The fact that its resolution has garnered very substantial investor support –a 41.6 percent average vote in the 2025 proxy season — is testament to the value investors place on political engagement that is transparent and accountable.

At the same time proxy access has facilitated dialogue between management and investors, helping to remove suspicion and identifying common concerns.  The resolution has been regularly withdrawn at companies following constructive engagement and adoption of responsive policies.

Demonstrating the value of proxy access, this year’s proxy season shareholders exercised their right and rendered a notable five majority votes on resolutions for corporate political disclosure and accountability, at the following companies: Meritage, 57.7%; CBOE Global Markets Inc., 55.8%; Crown Holdings Inc., 52.7%; Spirit AeroSystems, 51.4%; and Teradyne Inc., 51.0%.

These results show that political transparency and accountability are not gadfly concerns but reflections of investor recognition of the risks associated with political spending and the obligation that a company owes to its investors to reveal and justify the company’s use of shareholder value to advance a political cause or candidate.

It is hard to discern how investors benefit from denying them an effective way to register their opinions with a company on issues of high public and personal and financial interest.  The Constitution protects us from being compelled to support political speech with which we disagree.  It is difficult to take advantage of that right if no avenue is left open to vindicate it.  It is that avenue that Justice Kennedy was presuming would be left open.  The SEC should take heed of that opinion.

Karl Sandstrom is Senior Advisor to the Center for Political Accountability and a former member of the Federal Election Commission. Bruce Freed is President of the Center for Political Accountability.

Please access the full article here.

State Financial Officers to SEC Chair Atkins on Rule 14a-8

December 3, 2025
The Honorable Paul S. Atkins
Chair
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Dear Chair Atkins:

We write to express concern over recent changes in the SEC’s administration of Rule 14a-8 and the implications of your public statements encouraging companies to exclude shareholder proposals based on untested interpretations of state law. These changes would suppress shareholder governance, diminish corporate transparency and accountability, and create risks to profitability and reputation for companies—further undermining the confidence that has attracted global investors to American firms and markets. We urge you to reconsider.

We recognize that the Commission must balance limited resources and administrative efficiency with its broader responsibilities. However, the Commission’s recent changes to the no-action process, indicating that the staff will not substantively evaluate companies’ legal basis for excluding proposals in the current proxy season, reflect not merely an operational adjustment but a substantive departure from the SEC’s historical role as a neutral arbiter of shareholder access. This shift has significant practical consequences for investors and capital markets more broadly. Additionally, you recently made public comments at a corporate governance event in Delaware, encouraging companies to exclude non-binding proposals on the basis of an untested legal theory, effectively inviting firms to circumvent a process that has long enabled constructive engagement with investors.

Shareholders retain other tools, including director votes and public campaigns. But sidelining the Rule 14a-8 process narrows the available space for thoughtful, productive engagement. In doing so, it increases the likelihood that investors will escalate their concerns through more disruptive and adversarial channels. Rather than alleviating pressure on corporate boards, these changes risk fueling board-level instability and reputational risk if companies appear to block investor voice.

Our concerns are grounded not in ideological preference but in fiduciary duty. The ability of long-term investors to raise governance and risk concerns through non-binding proposals has contributed significantly to the resilience and transparency of U.S. markets. Curtailing that mechanism places long-term value creation efforts at risk and undermines the accountability that global investors have come to expect from American companies.

The Securities and Exchange Commission is tasked with investor protection as a core tenet of its three-part mandate. Under your tenure, the Commission has repeatedly made significant policy changes affecting shareholders’ rights to engage with the companies they own, without undertaking formal rulemakings or soliciting public comment. We are deeply concerned by this trend as it inhibits the feedback mechanism between the marketplace and its regulator. We urge you to reconsider this course and reaffirm the Commission’s longstanding role in ensuring that shareholder rights are respected and transparently administered.

We remain ready to work constructively with you and your colleagues to ensure that U.S. markets stay the most trusted and transparent in the world.

Signed, 

Elizabeth A. Steiner, Oregon State Treasurer

Michael W. Frerichs, Illinois State Treasurer

Deborah B. Goldberg, Massachusetts State Treasurer and Receiver-General

Dave Young, Colorado State Treasurer 

Brooke Lierman, Maryland State Comptroller

Erick Russell, Connecticut State Treasurer

Brad Lander, New York City Comptroller

Laura M. Montoya, New Mexico State Treasurer

Mike Pellicciotti, Washington State Treasurer

Zach Conine, Nevada State Treasurer

James A. Diossa, Rhode Island State Treasurer

Julie Blaha, Minnesota State Auditor

Mike Pieciak, Vermont State Treasurer

Fiona Ma, California State Treasurer

Thomas P. DiNapoli, New York State Comptroller

Colleen C. Davis, Delaware State Treasurer

Malia M. Cohen, California State Controller

The Cost of Limiting Shareholder Voice: How New Restrictions Threaten Economic Growth

Karl Sandstrom and Bruce Freed
Center for Political Accountability

Restricting shareholder proposals undermines the checks and balances that protect markets, innovation, and social responsibility.  

Illegal child marriages. Coerced sterilization. Debt bondage. Until recently, shareholders had the right to raise such human rights concerns through formal proposals to corporate boards, a right protected by the Securities and Exchange Commission (SEC) for nearly a century. Recent regulatory and interpretive changes, however, are creating new challenges for this fundamental avenue for accountability.

The sugar cane industry, for example, has become emblematic of harmful supply chain practices, involving some of the most visible and widely reported examples of concerning business practices. Companies including Pepsi, Coca-Cola, and Mondelez have faced investigations into alleged labor abuses, including debt bondage. At Pepsi’s 2025 annual meeting, shareholders sought to submit a proposal requesting a report on the company’s efforts to address human rights violations in its supply chain. The company excluded the proposal, citing SEC staff’s revised interpretation of Rule 14a-8, outlined in Staff Legal Bulletin 14M (SLB14M). 

SLB14M provides guidance on the application of Rule 14a-8, which allows eligible shareholders to submit proposals for inclusion in a company’s proxy statement. The bulletin also specifies the circumstances under which companies may exclude these proposals. Citing that revised interpretation, Pepsi argued that the reported abuses occurred in franchise operations (which are “expected” to follow a code of conduct), not in Pepsi’s direct supply chain, and that the franchise sales were not “significantly related” to Pepsi’s business. Essentially, Pepsi claimed that the source of the ingredients sold under its brand did not materially affect its own business because the company itself did not purchase them. The SEC agreed with Pepsi, preventing shareholders from voting on the proposal. 

Pepsi did not dispute reports that its products sold in India were allegedly made with sugar obtained through a supply chain linked to debt bondage and coerced hysterectomies. Instead, the company contended that these issues were unlikely to materially impact its operations. According to the SEC’s interpretation, shareholders may only make proposals with significant financial implications for the company itself, no matter the broader social or environmental consequences.

While SEC rules often shift with administrations, this case reflects a larger trend: a narrowing of shareholder voice. Several recent developments illustrate the pattern:

• A judge ruled in January that American Airlines’ retirement plan violated the law by allowing BlackRock, its asset manager, to use proxy voting to promote ESG objectives. 

• In February, a coalition of Republican state auditors, comptrollers and treasurers from 18 states issued a letter to the SEC  and Department of Labor urging them to adopt regulations for asset managers that prohibit the use of ESG or DEI goals.  

• A  House Judiciary Committee report argued that investors supporting lower carbon emissions created an illegal “climate cartel.”

•  Pending legislation was introduced in Congress in January seeking to reduce shareholders’ rights to bring forth proposals.

• A speech from an SEC Commissioner at the “SEC Speaks” Conference 2025 signaled forthcoming rules that could further limit shareholder proposals on major policy issues, including public health or wages.

• New staff interpretations of SEC rules restrict large shareholders from engaging with management or holding directors accountable for social and environmental performance.  

Collectively, these developments constrain shareholders’ capacity to influence corporate behavior towards more sustainable or ethical practices. Critics of shareholder engagement argue that investors should focus solely on financial returns, treating social and environmental considerations as irrelevant. This is a false dichotomy on two levels. First, environmental and human rights issues often carry real financial risks. Second, systemic harm, from environmental degradation to inequality, affects the broader economy and threatens the diversified portfolios and returns of investors.

The Economic Opportunity in Sustainable Business Practices:

The sugar supply chain demonstrates both the risks and opportunities for companies and investors. Brands derive tremendous value from reputation. The perception that Pepsi products are linked to labor abuses can erode consumer trust and is a significant concern for the company. Addressing these issues presents an opportunity to safeguard brand equity and strengthen customer loyalty. For shareholders, engagement extends beyond a single company’s prospects. Human rights and sustainability issues influence global economic conditions, which in turn impact the returns of diversified investors. By encouraging companies to adopt responsible practices, shareholders can help stabilize markets, support GDP growth and mitigate systemic risk. 

The Path Forward: Strengthening Market-based Solutions

Notably, this regulatory shift is occurring under a Republican-controlled administration and Congress, which has historically advocated for private property rights. Policymakers should ensure that proposal mechanisms remain consistent with free-market principles, enabling investors to allocate capital efficiently and hold companies accountable. If financial market rules are being revised, it should not be forgotten that the strength of our economy is based on a free capital market, which allows investors to fund a broad array of enterprises that create authentic value over the long term. 

Limiting shareholder voice affects far more than greenhouse gas emissions and DEI. It alters the balance of power in capital markets, shifting decision-making from investors to executives and politicians. Investors are losing the power to push back when corporate executives risk the future of the company or the economy to boost profits. And this doesn’t just harm investors. This means our markets will become less effective allocators of capital, as decisions are made by unrestrained executives driven by short-term incentives or politicians swayed by political maneuvering, rather than by a commitment to the integrity of capital markets. 

The Innovation Opportunity

Recent SEC actions show the practical consequences. In March, SEC staff allowed Wells Fargo to exclude a proposal on workers’ rights and collective bargaining, a proposal that observers note likely would have been allowed a few months prior. Limiting shareholder engagement reduces opportunities for market-driven innovation in workforce development, climate solutions and sustainable growth strategies. Climate issues illustrate the stakes vividly. Analysts project that unchecked greenhouse gas emissions could reduce global GDP by 50 percent between 2070 and 2090. Economic modeling suggests that decisive global climate action could lead to a $43 trillion gain in net present value to the global economy by 2070. Investor engagement can accelerate the transition to cleaner energy and sustainable business models, creating economic opportunities while mitigating systemic risks. Ignoring investors’ voices on these matters rejects the role that capital has played in creating the economic engine of the U.S. economy.

Workers depending on 401(k) plans, such as those in the American Airlines plan, could face real financial consequences if investor oversight is curtailed. Estimates suggest that the current trajectory of emissions could depress the entire equities market by up to 40 percent. The fossil fuel industry’s shortsightedness and the current administration’s policies are exacerbating the environmental crisis and creating economic and retirement instabilities. 

Limiting shareholder voice threatens far more than individual investors. It weakens the very mechanisms that keep U.S. markets dynamic, resilient and capable of driving long-term growth. The muzzling of investors is part of a larger story: environmental data is being scrubbed from federal websites, critical scientific inquiry is being stalled and dissenters are being penalized. Historically, U.S. markets and democracy alike have relied on open debate and the free flow of information. Undermining shareholder oversight is part of a broader erosion of transparency that threatens both markets and the very norms that underpin a free society. Shareholder input is not a political preference but a market stabilizer, an innovation driver and a critical check on corporate governance. Preserving this function is essential to sustaining the economy, the integrity of capital markets and the broader social and environmental systems on which long-term prosperity depends. 

Representative Sean Casten talks Shareholder Value

This is an excerpt from the House Financial Committee Meeting on 10th September, Proxy Power and Proposal Abuse: Reforming Rule 14a-8 to Protect Shareholder Value.

Rep Sean Casten:

Thank you Mr. Chairman. Thanks to our witnesses. And I want to just preface this by acknowledging that I'm going to be a little bit pedantic, but this conversation is, I'm trying to find a polite way to say this. It's really dumb. Let's just acknowledge some things that I should not be debated, but I can't believe we're suggesting they're not true. Shareholders are actually the people who own companies. The executives of a company serve at their pleasure. They are tasked to carry out the will of those shareholders. They are custodians of shareholders investment, but they are not actually the people in charge and shareholders are not monolithic in terms of their interests, in terms of how they define value. Hearing my colleagues say the only thing that matters is shareholder value. What the hell does that mean? Maybe I'm a shareholder who thinks that a company's free cashflow should go to paying dividends.

Maybe I'm a shareholder who think that value would be maximized if we reinvested that cashflow. Maybe I'm a shareholder in Kodak who thinks we should be pivoting to digital photography because you're committed to a technology that isn't going to survive. Maybe I'm a shareholder in a car company who thinks we should be pivoting to EVs. It doesn't matter whether you're right. You have different opinions about value. And the way that companies adjudicate those disputes is to have a high functioning board executives who are competent people who surface their opinions. We try to resolve them in some collaborative fashion. And if you can't resolve them in some collaborative fashion, ultimately you go to a majority vote. This is not freaking complicated right now, the idea that some voters are more worthy of having their opinions heard than others. Some voters, only the ones we agree with understand what value is.

I guess that's on brand for the party of January 6th, but that's not actually the way that you make good decisions, right? So I say this not as a member of Congress. I say this as someone who spent 16 years as a CEO who ran a company where I was a minority investor because I didn't have the couple hundred million dollars that we needed. So we had a bunch of other money that came in, and sometimes I disagreed with our investors. Sometimes I persuaded them of my opinion, sometimes they won, sometimes I won. I maintained I was probably right more often than I won, but it didn't matter. They didn't have the votes. And our board understood. And I understood that sometimes my economic interests were at odds with the shareholders. Right? Now, I could have come to Washington and said that as a activist for the interests of minorities, I will come here and represent our nation's poor, underappreciated CEOs. But I don't think that's actually the way economy works. So Mr. Mueller, I guess, do you agree that there are conflicts of, and that I don't know when Enron collapsed was a part of that because of board oversight failures and conflicts of interest with management, just yes or no? Yes. Okay. And do you agree that it's important for boards to have independent directors who are distinct from management?

Witness Ron Mueller:

Yes.

Rep Sean Casten:

Okay, good. So does the New York Stock Exchange, so does Nasdaq. That all makes a lot of sense. Ms. Keel, would you agree that transparency and executive compensation is a good thing to have in corporate structures?

Witness Ferrell Keel:

Yes.

Rep Sean Casten:

Would you agree that shareholders should have a say on board of directors compensation?

Witness Ferrell Keel:

Yes.

Rep Sean Casten:

Under the Dodd-Frank Act are companies legally required to act in response to a shareholder vote on executive compensation?

Witness Ferrell Keel:

No.

Rep Sean Casten:

No, they're not. They're non-binding advisory opinions. In general, are companies legally required to take action on shareholder proxies?

Witness Ferrell Keel:

Technically no. But effectively, yes.

Rep Sean Casten:

Well, according to your firm, shareholder proposals are typically advisory in nature and not binding in a corporation.

Witness Ferrll Keel:

Technically, yes.

Rep Sean Casten:

True. That is all my experience. That is the law. We're talking about the law. We're not talking about technically. We're talking about should we change the law and we are in agreement that the law does not actually say these proposals are binding. The law says they are advisory, they get factored in, and then we have a high functioning board. Mr. Copeland, you had said earlier that I think you had on public choice theory and that Congress proves that you shouldn't just decide things by majority vote. That's not how boards work. As we just established, the law says that these are advisory opinions. So we're sitting here having this whole conversation about a boogeyman who doesn't exist. This conversation is about do shareholders have rights, do shareholders own companies, and do they have any rights to express their opinions of value in corporate boardrooms? Mr. Lander, you want to add anything here? Am I missing anything as a fiduciary? That was very well said. I hope our next hearing is not dumb. Yield back.

Shareholder Proposals and the Right of Investors to Express Collective Voice on Materiality

The U.S. securities markets are built on the principle that materiality is defined by investors. Courts and the SEC recognize that information is “material” if a reasonable investor would view it as important in deciding how to vote or invest.

The shareholder proposal process under Rule 14a-8 is a crucial tool for investors to express this judgment collectively. Proposals allow investors to identify and elevate issues they deem material and to signal through voting outcomes the significance of those issues to the company’s investor base. Protecting this right ensures that shareholders retain the ability to guide corporate board and management on the risks and opportunities that matter to their investors.

Key Takeaways

• Collective voice defines materiality. Through voting outcomes on shareholder proposals investors indicate what issues are material to them.

• Shareholder proposals operationalize this right. They are a structured, market-based tool for investors to communicate material concerns directly to boards and management.

• Disclosure law reinforces this principle. Materiality under securities law is typically determined under a “reasonable investor” standard – i.e., what investors consider significant in consideration of the total mix of information.

• Restricting this voice undermines exercise of fiduciary duty and market accountability.

Shareholder Proposals: Expressing Collective Voice

• Structured Process: Proposals let investors raise concerns in a 500-word request included in proxy materials.

• Voting as a Signal: Support levels communicate clearly to companies what investors deem significant.

• Proven Accountability: Proposals have driven reforms on governance (independent chairs, majority voting), risk management (opioid oversight, predatory lending), and systemic challenges (climate resilience, online child safety).

• Dialogue & Resolution: Many proposals are resolved through engagement, improving governance and disclosure before a vote is even needed.

Why This Right Matters

• Fiduciary Duty and Materiality: Long-term, heavily diversified investors cannot diversify away systemic risks—such as climate disruption, public health crises, or financial instability. Shareholder proposals are the primary tool for these investors to express collectively which risks they consider material to preserving long-term portfolio value, making this right a cornerstone of fiduciary duty.

• Material to Business, Not a Distraction: Far from being a distraction, shareholder proposals surface core issues that boards may otherwise overlook or downplay. By elevating concerns about governance, risk management, or systemic challenges, proposals make companies more resilient, responsive, and ultimately more profitable over time.

• Forward-Looking Materiality: Shareholder proposals often highlight issues that may be uncertain today but are probabilistically material tomorrow. By surfacing such risks early, they ensure companies and investors can act before crises crystallize, consistent with the “reasonable investor” standard in securities law.

• Consistent with judicial definition of materiality. The Supreme Court has held that a fact is “material” under securities laws if there is “a substantial likelihood that a reasonable shareholder would consider it important” or if its disclosure would have “significantly altered the ‘total mix’ of information made available.” This definition originates in TSC Industries v. Northway, 426 U.S. 438 (1976), and was expressly adopted in Basic Inc. v. Levinson, 485 U.S. 224 (1988), which added that for contingent or speculative information, materiality depends on both the probability of the event and its potential magnitude.

The right to file and vote on shareholder proposals is the collective voice of investors on materiality. It is the practical expression of the “reasonable investor” standard in securities law. Weakening this right would strip investors of a cornerstone of corporate accountability and market stability. Protecting it ensures that materiality remains defined by those who bear the risk and reward of investment: the investors themselves.

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Authored by the Shareholder Rights Group.

Why Minority Support for Precatory Shareholder Proposals Promotes Transparency and Accountability

Sanford Lewis, Director , Shareholder Rights Group

While shareholder proposals on governance are perennial favorites that win majority support from shareholders, advisory proposals that continue to receive significant support from a bloc of investors highlight areas in which enhanced corporate disclosure could be material to a significant portion of a firm’s investors. Shareholder proposals that allow investors to aggregate collective support for improved disclosure by companies are an important part of the functioning of heterogeneous capital markets.

A July 3 post on the Blue Sky Blog asserted that the low voting outcomes for anti-ESG proposals reflect a general sentiment of shareholders in opposition to precatory proposals on ESG. But the voting outcomes this year do not bear out this conclusion. The article mistakenly concluded that this year’s 2 percent average voting for the anti-ESG proposals is not far from the supporting votes on ESG proposals overall this season.

A credible source of analysis, Morningstar, reports that the overall support for pro-ESG proposals averaged 20 percent this year. There is a large difference between 2 percent and 20 percent support. In fact, 20 percent support is recognized by many as the level that often compels boards and management to take note and consider responsive action.

Take proposals related to diversity, equity, and inclusion (DEI). There was a huge gap in voting outcomes this year between proposals that  focused on eliminating corporate diversity programs, which averaged support of 2 percent or less, and voting outcomes on proposals that sought better disclosure on diversity. Many investors continue to view board and employee diversity as a material issue relevant to a company’s capacity to function in a diverse society. Most tellingly, Georgeson reports that this year, proposals asking companies to disclose EEO data that the companies previously filed with the government received an average of 33 percent support. Instead of blanket opposition to precatory proposals, this outcome exemplifies the discernment of investors in supporting proposals that promise materially useful disclosure at low cost. Making those EEO reports public improves information to the market at essentially zero cost to the companies – this is a bargain for investors. In contrast, even a more expensive approach to assessing corporate diversity programs, asking companies to conduct racial equity audits, received 18 percent support, on average.

The suppressed top voting outcomes this year for environmental and social proposals reflect an ongoing political and legal campaign that pressures the largest asset managers, suppressing their significant volume of votes for many environmental and social proposals. Nevertheless, voting shareholders still demonstrate discernment and support for many shareholder proposals that sought improved corporate environmental and social disclosure.

Voting evidence from this season shows that shareholder proposals allow blocs of investors to express their collective voice regarding opportunities for improving corporate disclosure that would aid their investment strategies and decisions. A majority vote is not required for shareholder proposals to persuade the board and management regarding market demand for better disclosure on an issue viewed by their investors as significant to their company.

The shareholder proposal rule is structured to ultimately screen out repetitive proposals that are truly viewed as low quality by voting investors. In a 2020 rulemaking, the SEC  concluded that if a proposal receives less than 5 percent support the first time it is submitted, a proposal on substantially the same subject should not be allowed to be resubmitted for three years. The commission viewed this increase over the prior 3 percent threshold as better calibrated to ensure that the proposal that is resubmitted could have a realistic prospect of eventually obtaining broader support.  Notably, the number of pro-ESG proposals that are receiving support below that commission-determined threshold has essentially held steady, not risen. Instead, this year, a surge in anti-ESG proposals filed by new proponents drove up the total number of proposals receiving less than 5 percent support. They have a right to file those proposals, and shareholders have a right to reject them. That’s the marketplace of ideas working, not failing.

The shareholder proposal process allows shareholders, rather than the SEC, to make the first call as to whether a proposal is strong enough to merit ongoing consideration and whether the issue reflects a material concern for a significant portion of investors. While governance proposals may win the most votes in the current climate, other precatory proposals allow investors of nuanced strategies to exercise their voting rights and encourage better disclosure of emerging material interests to the market.  Precatory proposals continue to provide a dynamic opportunity for engagement and deliberation between and among investors and their companies.

Health and Safety in the Fast Food Industry

MIKAIL HUSAIN, ESG Analyst, SOC Investment Group

LOUIS MALIZIA, Corporate Governance Director, SOC Investment Group

In recent years, the food service industry has been rife with workplace health safety issues. Food service workers have been attacked, stabbed, shot, and killed by customers in the restaurants where they work. According to one study, between 2017 and 2020, at least 77,000 violent or threatening incidents took place at California fast-food restaurants. Recent data indicate that the cost of workplace violence could be as much as $56 billion annually – and that’s likely an undercount. However, workplace health and safety issues are not limited to customer violence. Workers have also been made to work under unsafe and unsanitary conditions, such as restaurants with high kitchen temperatures and restaurants infested with vermin.

These issues and the media response they elicit are clear operational and reputational risks for the companies, which can lead to difficulties with staff retention in an industry with high turnover. According to the U.S. Chamber of Commerce, the food service and hospitality industry has a consistently high “quit rate.” Understaffing at fast food restaurants can lead to longer wait times for customers, diminished employee productivity, and an increase in safety hazards. Workplace health and safety issues in fast food restaurants have led to worker strikes and protests of working conditions, as well as fines and temporary restaurant closures imposed by regulators.

Why should investors care? If left unaddressed, workplace health and safety issues can expose companies and their shareholders to unnecessary risk. In recent years, shareholders have recognized the risks posed by workplace health and safety issues and are pressing companies to take more action to address them. In 2023, Dollar General shareholders demonstrated this with a majority vote in support of a health and safety audit proposal.

To address these risks, SOC Investment Group has filed health and safety audit proposals at McDonald’s, Yum! Brands, Restaurant Brands International, and Chipotle for the 2025 proxy season. The proposals are similar to the proposal we filed last year at Chipotle, which received 30% support from shareholders, well above the average support level of 18% for social proposals in the S&P 500 in 2024. The resolution requests that the companies’ boards of directors commission an independent third-party audit on the impact of company policies and practices on the safety and well-being of workers throughout company-branded operations.

We believe any relaxation of safety standards in pursuit of short-term benefits creates risks for workers, customers, and shareholders and may result in long-term reputational damage that can be difficult to reverse. In addition to these risks, companies that neglect health and safety in the short term may face increased regulatory and business risks that can erode margins and reduce long-term shareholder returns.

Further Reading.

Shifting Policy Terrain on Shareholder Engagement

NATALIA RENTA , Associate Director, Corporate Governance and Power, Americans for Financial Reform Education Fund

The current administration has hit the ground running with policy changes designed to stymie shareholder engagement and corporate accountability, with particularly visible and harmful attacks targeting corporate progress on racial equity. Our opponents laid the groundwork for these actions through bills passed by the House of Representatives last Congress and Project 2025.

One of the first executive orders Trump issued tasked the Attorney General with writing a report with recommendations on how to encourage the private sector to end diversity, equity, and inclusion (DEI) initiatives. It also tasked the Attorney General and other agency heads with coming up with a “strategic enforcement plan” to “deter DEI programs or principles.” While a judge temporarily blocked implementation of portions of this and another anti-DEI executive order, many large corporations quickly pulled away from their DEI initiatives.

Meanwhile, the Securities and Exchange Commission (SEC) took various steps to tilt the shareholder advocacy playing field in favor of corporate boards and executives and against shareholders pushing them to address important risks. First, the SEC wreaked havoc by updating a Q&A that, in effect, incentivizes large asset managers to cast pro-management votes and halt any positive engagements with companies on critical issues shareholder advocates have put to the fore. It does so by expanding the types of shareholder advocacy that could be construed as “changing or influencing” control of a company, which would trigger further regulatory requirements from investors who own over 5% of a company’s shares. Following the release of the Q&A, BlackRock and Vanguard temporarily halted meetings with companies.

The SEC also made it harder for shareholder proponents to get their voices heard by issuing Staff Legal Bulletin 14M, which changed how the SEC staff evaluates company requests to effectively let them exclude shareholder proposals from proxy statements. As Commissioner Crenshaw noted, this bulletin “moves the goalposts smack dab in the middle of this year’s shareholder proposal process.” She also noted that corporations will be able to make additional arguments to exclude shareholder proposals while shareholders won’t be able to change their proposals to be in line with the parameters set by the new legal bulletin.

Unfortunately, we can expect more actions by the SEC to further incentivize asset managers to cast pro-management votes, coerce proxy advisors to recommend pro-management votes, weaken corporate disclosures, and make it harder for shareholder proponents to get their proposals in proxy statements.

We can also expect detrimental shifts in policy from the Department of Labor as it will likely attempt to rescind a Biden-era rule that makes clear ERISA fiduciaries can take into account relevant environmental, social, and governance factors when making investment decisions and encourages fiduciaries to exercise shareholder rights, including proxy voting. Republican Attorneys General sued to block the rule, but a district court judge in Texas has upheld the rule twice, including this past February.

As the policy terrain continues to shift, shareholder advocates will have to remain vigilant and experiment with new strategies to get their voices heard and make change.

For more perspectives on the 2025 Proxy Season, click here.

ICCR Letter to BlackRock on Integrating ESG Risk Factors

In November of 2024, ICCR wrote Larry Fink, the CEO of BlackRock, expressing a number of concerns regarding BlackRock’s 2024 proxy voting record on shareholder proposals related to environmental and social and governance (ESG) risks.

Dear Mr. Fink,

We are writing on behalf of the Interfaith Center on Corporate Responsibility (ICCR), a coalition of over 300 global institutional investors that collectively represent more than $4 trillion in managed assets, to reflect the concerns of a number of investors and clients regarding BlackRock’s 2024 proxy voting record on shareholder proposals related to environmental and social and governance (ESG) risks. Our members, many of whom are shareholders and clients of BlackRock, are long-term investors who have raised these concerns with you before through conversations and correspondence.

While we are mindful of the recent pressures fund managers face from parties attempting to discredit ESG, the fiduciary case for integrating material ESG risk factors into investment decisions and proxy voting is clear and irrefutable. BlackRock’s own research1 indicates that the long-term implications of inaction on climate change could reduce global economic output by nearly 25 percent over the next two decades, making addressing climate change a material issue for fiduciaries. Yet despite this, BlackRock's recently released 2024 Global Voting Spotlight reports that the firm “supported (only) four out of the 161 shareholder proposals on climate and natural capital that we voted on”. This was 2.5% of votes cast on climate resolutions. The firm’s proxy voting record on shareholder resolutions related to impacts on people was no better as BlackRock “supported 16 out of the 332 shareholder proposals we voted on (~5%), 14 at U.S. companies and two in EMEA”. We believe this an abdication of fiduciary duty and is also bad business.

BlackRock’s survey of institutional investors clearly indicates that your clients care about proxy voting on sustainability (which emerged as the number one criterion for selecting managers by 20% of 200 institutional investors surveyed, second only to “access to proprietary deals’ - selected by 23% of respondents) so you will not be surprised that we are raising these concerns again.

Furthermore, BlackRock’s 2024 proxy voting record and rationale appear at times to be unclear. The most recent NPX filings indicate BlackRock voting against disclosure asks that it supported only last year, and offering vague voting rationale on other asks arguing that: “The request is either not clearly defined, too prescriptive, not in the purview of shareholders, or unduly constraining on the company”. The 2024 Global Voting Spotlight also indicates that in over 60% of the cases, BlackRock did not support a shareholder resolution because the "company has a process in place to address business risk” even in cases when the company did not make appropriate disclosures about the processes in place to address the issue(s) to the shareholders, the proponents or the SEC. At DexCom, BlackRock opposed a majority supported 2024 shareholder proposal calling for political spending disclosure in an election year. This is a clear example of BlackRock’s understanding of material risks raised by shareholder proposals diverging from the majority of shareholders at the company. Given how important proxy voting on sustainability is to your clients we hope you will address some of these apparent inconsistencies.

In February 2024, we welcomed BlackRock’s announcement that it was developing a new sustainability-focused stewardship offering for clients who want its active ownership work to drive decarbonization and sustainability outcomes3. The announcement explained that this service was in response to client demand as a survey of 200 institutional investors globally, representing nearly $9tn in assets under management indicated that 98% of them have set some kind of transition investment objective for their portfolios. However if managing climate risk is a key element in maximizing long-term value for clients then we would expect BlackRock to pursue that consistently as part of your fiduciary duty. BlackRock’s own Resilience Through Change; 2024 Insurance Global Report indicates that 99% of the 410 senior executives representing US 27T of AUM surveyed reported having set at least one type of transition objective within their investment portfolio, a clear indication of the materiality of climate risks among the majority of that sector.

As we look at the hundreds of climate related and social resolutions, we believe many more than 4 resolutions make a strong business case related to shareholder value and are not overly prescriptive. It seems like BlackRock has instituted a new high bar for shareholder resolutions that is almost impossible to meet. We are concerned about what motivated this change and fear that pressure from conservative investors played a role in the shift. In addition, we note that many other investment firms guided by the same fiduciary standards as BlackRock have a much higher number of percentage of votes for resolutions.

Furthermore, while we appreciate your case-by-case approach to assessing shareholder proposals, ICCR members and many of your clients are investors with diversified portfolios and ignoring systemic risks like climate and racial justice may benefit one of their companies but passes that cost on to the other companies in their portfolio. PRI and CAF’s recent guidance on stewardship also states that: “Using influence to promote short-term performance or the performance of individual companies, industries, or markets, without regard to overall value, does not constitute stewardship”.

There is growing evidence that asset owners are becoming increasingly concerned about asset manager’s proxy voting on ESG shareholder proposals5 and many are taking action6. And it seems these concerns are well placed. The UK Asset Owner Stewardship Review highlights a growing misalignment between asset owners and asset managers when it comes to exercising stewardship and proxy voting at major Oil and Gas companies. This misalignment is more pronounced (i) in recent years, (ii) on shareholder resolutions (vs management proposals) and (iii) at American companies (vs. European ones). There is also worrying evidence that asset managers’ corporate engagements are not moving the needle with companies.

As clients and shareholders our members want to see BlackRock as both a market and an ESG leader and would welcome efforts on behalf of the firm’s leadership to reiterate their commitment to ESG and to commit to a critical review of their proxy voting guidelines and record. We welcome the opportunity to continue the dialogue with you on the issues raised.

Sincerely,

Josh Zinner, CEO Interfaith Center on Corporate Responsibility

Katie McCloskey, Vice President of Social Responsibility, Mercy Investment Services

David A. Klassen, Chief Investment Officer, The Pension Boards - United Church of Christ, Inc.

Matthew Illian, Director of Responsible Investing, United Church Funds

Ethan Birchard, Executive Director, Friends Fiduciary Corporation

How Investors Deploy Shareholder Proposals

Patrick Miller speaks with Sanford Lewis regarding investors who file shareholder proposals at publicly-traded US companies related to social and environmental issues. They discussed the process for submitting these proposals pursuant to SEC rules.

HOST: Patrick Miller is the Founding Attorney at Impact Advocates APC.

*Disclaimer: The information in these recordings is provided for informational purposes only. You should consult with an attorney before you rely on this information. This information should not be seen as legal advice and does not create an attorney-client relationship. This interview is meant to be a general discussion and may not include all relevant information regarding the issues covered.

Why Faith Groups Have Historically Practiced Responsible Investing

The full statement can be found on ICCR’s website.

Religious organizations steward their organizational finances and the investments managed on behalf of their constituents and beneficiaries in alignment with the beliefs, teachings, and values of their respective faiths. Many religious organizations develop investment guidelines, which include strategies such as screens to exclude industries that they believe cause injury to society, shareholder engagement with portfolio companies to mitigate environmental and social harm, and investing in companies or projects that are making a direct and positive impact.  This practice, known as faith-consistent investing, is one form of what today is commonly referred to as sustainable and responsible investing. Faith-consistent investing is a fundamental right protected under the First Amendment, which guarantees both free speech and religious freedom, and ensures that investors are able to make their investment decisions in accordance with their beliefs.

The Interfaith Center on Corporate Responsibility (ICCR) is a coalition of over 300 faith and values institutional investors who, for more than 50 years, have been leaders in faith-consistent and sustainable investing. Our genesis as an organization is grounded in the advocacy of multiple faith groups to address the racist apartheid regime in South Africa. Faith-consistent investing leads religious investors to assess how corporate policies and practices may adversely impact the health of people and the planet, which has a direct impact on the long-term performance of their portfolios.

Faith-based investor engagements with portfolio companies, through dialogue and the filing of shareholder proposals, are a natural extension of these beliefs and are central to both our duties as trusted fiduciaries seeking competitive returns and our responsibilities as faithful stewards supporting the fundamental values of our religious traditions. For this reason, we are concerned about any attempts by legislators or policymakers to interfere with investors’ fundamental freedom to make investment choices and/or engage with portfolio companies in alignment with their investment philosophies and institutional values. This includes letters received from the House Judiciary Committee in 2024 by several of ICCR’s faith-based members requesting informational disclosures under the pretense of exploring violations of antitrust laws.

While each faith institution has its own set of priority issues that it addresses through its respective ministries and advocacy work, there are many issues where faith investors’ interests converge. Actions to mitigate the climate crisis ravaging our planet, to uphold human rights, including the fair treatment of workers, and to ensure equitable and affordable access to healthcare are just a few examples of priority issues of common concern among many faiths.  The 2016 Edinburgh Finance Declaration is one example of the world’s leading faiths articulating their shared values. We believe that companies that adopt forward-looking policies and practices to mitigate environmental and social risks are well-positioned for long-term financial success and value creation. Conversely, companies that ignore these risks may endanger the performance of the capital we are called to steward, and impose enduring external costs on society, the economy, and the planet that sustains us. Over the past 50+ years, ICCR member engagements with corporations on these issues have resulted in improved conditions for various stakeholders, including workers, customers, communities, and shareholders. For instance, most of the world’s faiths emphasize stewardship of the planet, care for creation, and moral responsibility toward the environment, which makes them deeply concerned about the climate crisis. Faith investors working in climate-vulnerable communities witness firsthand how climate change adversely affects these areas. Without the adoption of meaningful climate mitigation and adaptation measures, extreme poverty and inequality, risks to land, food and water security, forced migration and geopolitical conflict, along with global health risks, will all intensify. Consequently, faith investors often align with other like-minded investors to tackle climate risk and advocate for a reduction of GHG emissions from our portfolio companies. Faith-based investors actively promote worker justice, which includes workplace health and safety protections, the provision of a living wage, and the freedom to associate and engage in collective bargaining. Faith-based investors have advocated for health equity, engaging with the world’s largest healthcare companies to ensure that medicines and healthcare services are affordable and accessible reaching those most in need.

Importantly, while we often cooperate in investor spaces around strategies to spur corporate action, we make independent investment decisions to provide risk-adjusted returns to our individual constituents and beneficiaries in line with our respective faith beliefs. The U.S. Constitution provides that “Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof,” and the First Amendment protects the religious liberty that is foundational to this great nation. This ban against government interference in faith-consistent practices is essential when considering all aspects of the life and work of religious institutions, including their investment decisions.  It preserves their autonomy to invest their organizational assets and the pensions of their millions of beneficiaries in a manner consistent with their religious beliefs.  In recognition of the constitutional limits of entanglement between the federal government and religious institutions, Congress included a Church plan exemption in the Employee Retirement Income Security Act of 1974 (ERISA).

We want to reiterate our belief that companies committed to addressing their impacts on society and the environment are better positioned for financial success over the long term. For this reason and because our faith calls us to do so, we will continue to invest and engage with our portfolio companies to realize that goal.