The New Reality of U.S. Environmental & Social Shareholder Proposals 

An early review of environmental and social shareholder proposals submitted in the United States for the 2025 proxy season reveals a dramatic shift, upending past norms, behaviors and assumptions. 

The February 12 SEC Staff Legal Bulletin No. 14M provides updated guidance on shareholder proposals under Rule 14a-8 of the Securities Exchange Act  of 1934, rescinding prior guidance issued in November 2021 (Staff Legal Bulletin No. 14L). The new bulletin clarifies the application of Rule 14a-8(i)(5) (economic relevance exclusion) and Rule 14a-8(i)(7) (ordinary business exclusion), tightening the standard for excluding shareholder proposals. The guidance raises the bar for proponents by applying stricter interpretation on whether proposals are significantly related to the company’s business and whether they address a significant policy issue with sufficient nexus to the company. Additionally, the new guidance removes the expectation for the board to provide an analysis in their no-action requests, streamlining the no-action request process and reducing the burden on boards.  

The effects of this policy change are already manifesting in a sharp reversal of key trends in environmental and social shareholder proposals. ISS-Corporate reviewed 295 shareholder proposals on environmental and social (E&S) topics submitted to companies year-to-date in 2025. Thematically, the overall landscape remains consistent with prior years, with so-called anti-ESG proposals maintaining a strong presence (72 proposals, accounting for 24% of E&S submissions), alongside a substantial volume of environmental and social proposals (93 and 129 submitted requests, respectively). 

While the outcome of 72% of these proposals remains pending, a review of those with a finalized status (voted, withdrawn, omitted) reveals significant shifts in both proponent behavior and the SEC’s response to no-action requests from companies. Excluding pending proposals, proponents have withdrawn 95% of requests focused on environmental issues and 62% of requests focused on social issues (excluding those related to lobbying and political contributions) – an unprecedented withdrawal rate. Historically, withdrawn proposals were viewed as indicative of successful negotiations, often signaling proactive commitments by companies to address underlying requests. This year, however, the high withdrawal rates likely reflect a strategic shift by proponents, anticipating exclusion under the SEC’s new guidance.  

 This heightened expectation for proposal omissions is evident in the review of proposals focused on lobbying and political contributions transparency. Between 2015 and 2024, only 32 of 915 such proposals were omitted due to a no-action request. So far, in 2025, 71% of these requests have been omitted, signaling a clear shift in the SEC’s approach and enforcement under its new guidance.  

The majority of proposals that have gone to a vote fall into the anti-ESG category (proposals aimed at countering environmental and social initiatives). Support for these proposals remains low, with a median approval rate of 1.4% of votes cast FOR and AGAINST.  

Shareholder proposals traditionally served as a barometer of investor and corporate sentiment on environmental, social, and governance (ESG) issues. Support levels signaled investor expectations for greater transparency and risk management, while proponent withdrawals often indicated corporate willingness to engage and address concerns.  

As we outlined in our report reviewing a decade of shareholder proposals, over the past three years, these signals have become less straightforward. As corporate disclosures improved, proponent requests became more granular and prescriptive, often seeking marginal enhancements. Investors, in turn, adopted a more nuanced approach to voting while also navigating political pressures related to ESG mandates.  

 Following the new SEC guidance, discerning clear signals on risk and materiality from shareholder proposal activity will be even more challenging. Companies and investors will need to conduct their own due diligence to assess the most relevant material issues. While recent SEC guidance on 13G and 13D filings has raised questions about the ease of investor engagement with portfolio companies, shareholder engagement will likely remain essential in helping both companies and investors navigate key risks and opportunities related to environmental and social issues.