Shareholder Governance Proposals Grab Focus as Others Lose Steam

Companies are seeing fewer ideologically motivated shareholder proposals on environmental and social issues as investor focus shifts to pleas for independent board chairs and stockholder rights.

Shareholder proposals, which often focus on environmental, social, and governance issues, are losing momentum as other forms of engagement prevail. Investors submitted significantly fewer resolutions in 2025 than they did the year before. But some areas fared better than others: the number of social and environmental proposals fell by 33% and 25%, respectively, while governance proposals only dropped about 3%, according to data from ISS-Corporate.

Environmental and social resolutions had a moment in the early 2020s. But they lost relevance after the Supreme Court’s affirmative action ruling and the second Trump administration’s push against climate initiatives and diversity, equity, and inclusion.

Governance proposals, which call for measures like board independence and shareholder rights, are expected to dominate this year. Ferrell Keel, a partner at Jones Day, said she’s already seeing an uptick in governance proposals and expects some shareholders who were previously focused on environmental and social issues to pivot.

“Companies are taking, and should take, the governance-related proposals more seriously,” Francesca Odell, a partner at Cleary Gottlieb Steen & Hamilton LLP.

A lot has changed since last year’s proxy season—the term for the period, usually early spring through early summer, when many companies hold annual meetings.

Proxy advisory firms such as Institutional Shareholder Services and Glass, Lewis & Co., which have long influenced voting decisions, came under fire from President Donald Trump and Republican-led states. DEI programs became a legal liability. And the Securities and Exchange Commission stopped weighing in on which shareholder proposals could be kept off annual meeting ballots, leaving companies to make the decisions themselves.

“It’s kind of a risk and an opportunity at the same time,” Keel said of the new shareholder proposal landscape. “Navigating uncharted waters is difficult, right? But it also presents the opportunity to step back” and think of a more tailored approach to corporate governance.

Waning Proposals

The SEC and investors themselves have lost the appetite for dealing with shareholder proposals, which could prompt another submissions dip this year, Odell said. Some early annual meeting materials already show shareholder resolutions fading. Apple Inc., for instance, had one proposal this year and four last year.

The only ESG-related proposal submissions gaining steam are anti-ESG resolutions, which increased by 14% in 2025, according to ISS-Corporate. Those proponents, which include The Heritage Foundation and self-described conservative think tank the National Center for Public Policy Research, will likely keep engaging this year, Keel said. They’re are already popping up on proxy statements: two of three shareholder resolutions at Deere & Co. are from right-wing organizations.

While ESG may not have the same clout as it once did, some investors say certain hot-button issues of the 2010s and early 2020s transcend news cycles.

Drew Hambly, investment director at California’s CalPERS, the nation’s largest public pension fund, pointed to greenhouse gas footprints as an example. Carbon emissions tracking isn’t a trend as much as it’s a sign of whether companies can manage their externalities, he said.

“We’re trying not to get too caught up in when the pendulum swings back and forth,” he said.

Just because governance resolutions aren’t politically motivated doesn’t mean companies won’t still try to leave them off ballots. Companies have already gotten the SEC’s nod this year to exclude proposals regarding independent board chairs, executive compensation, and board director terms. Companies overwhelmingly claimed these proposals had already been “substantially implemented” and didn’t warrant a vote, according to the regulator’s website.

For years, companies relied on the SEC to figure out which shareholder proposals they could leave off ballots. Now, they have a “large menu of options” as the SEC loosens oversight, Keel said.

Companies could exclude proposals with little fear of SEC enforcement but risk shareholder litigation. They could default to including proposals on ballots. They could also take the novel approach endorsed by SEC Chair Paul Atkins and argue non-binding proposals aren’t allowed under state law in Delaware, which is home to two-thirds of the Fortune 500.

The most likely scenario is that companies won’t take an aggressive position when deciding what to include on a ballot, Odell said. Investors like a certain amount of business and strategy risk to breed innovation and enhance returns. But governance and disclosure aren’t areas to mess around with, especially when some shareholders could go to court to get airtime for their stance, she said.

“The path in this environment if you’re a public company is shareholder engagement,” she said. “Most investors don’t want companies that are on one edge or the other of a risk.”