Boston, November 17, 2025 – The U.S. Securities and Exchange Commission (SEC) has unveiled a new approach to handling shareholder proxy disputes, a move that experts say could significantly curb the influence of shareholder activists, particularly on contentious topics such as climate change and workforce diversity.

Under the revised guidelines, the SEC will pause rulings on common proxy objections—including whether a shareholder proposal was filed late or if the filer meets minimum ownership requirements—until at least mid-2026. Companies can still seek exemptions based on jurisdictional grounds, such as state laws allowing the exclusion of specific proposals.

Impact on Shareholder Activism and ESG Proposals

The SEC’s change comes under Chairman Paul Atkins, an appointee of President Donald Trump, who has previously questioned the legality of many shareholder proposals under Delaware law. Legal analysts, including Erik Gerding, a partner at Freshfields, suggest that this could mark a major shift in the shareholder proposal process.

“Depending on whether Delaware courts and its legislature back these views, this could fundamentally alter how shareholder proposals operate,” Gerding said, warning that the new approach may reduce opportunities for investors to push corporate agendas on social and environmental issues.

Shareholder proposals addressing environmental, social, and governance (ESG) concerns—such as reducing corporate emissions or improving diversity policies—have received notable attention at recent annual meetings, although support from major institutional investors has declined in recent years. With the SEC’s new stance, many of these proposals may now be excluded from ballots, potentially limiting shareholder influence over corporate governance.

SEC’s Rationale for Policy Change

The SEC has cited administrative burdens, staffing limitations, and resource allocation as key reasons for the new policy. A spokesperson emphasized that the agency intends to focus on time-sensitive transactional matters, including capital formation and investor protection, particularly during periods of high filing volumes such as the recent government shutdown.

However, critics argue that the decision disproportionately favors issuers over investors. Caroline Crenshaw, the SEC’s sole Democratic commissioner, called the change “more of a giveaway to issuers than an exercise in resource allocation… an act of hostility toward shareholders.”

Potential Shift in Activist Strategies

Legal experts predict that activists may now pivot from proposing corporate resolutions to challenging individual directors directly or seeking alternative methods to influence board decision-making. Sanford Lewis, an attorney representing ESG activists, described the move as an “extreme assault on shareholder rights.”

Historically, hundreds of U.S. companies annually request SEC assurances that omitting shareholder proposals will not result in enforcement action. Roughly half of these requests are granted, shaping the scope and impact of corporate governance initiatives. The SEC’s new policy effectively suspends this practice for most routine cases, creating a more restrictive environment for shareholder-driven corporate change.