2025 U.S. Proxy Season Preview: Navigating Complexity in a Changed World

The full paperfull paper is available for download from the ISS-Corporate online library.

Introduction

Corporate Boards find themselves in a changed world this proxy season. The tide of shareholder and regulatory pressure on corporations to disclose and take action on environmental and social causes has subsided, while a wave of new risks ranging from new technology to geopolitical tension and potential trade wars disrupts the market. Every week seems to bring a new development, from changes in how investors view certain topics to SEC rules and guidance. Boards are being pulled in many, sometimes contradicting, directions, and must carefully navigate a myriad of legal, compliance, climate, social, political, and technological risks. As the 2025 Proxy Season approaches, ISS-Corporate examines key trends and themes that are likely to have significant impact. 

Key Takeaways

• The SEC’s updated its compliance and disclosure interpretations, prompting some investors to pause or change their engagement strategy. That means issuers may face difficulties engaging with investors ahead of their shareholder meetings. 
• Pushback against ESG and DEI initiatives is intensifying, and the surge of shareholder proposals criticizing certain environmental or social initiatives continues, representing 14.7% of all proposals submitted thus far for 2025. 
• Though these counter-ESG proposals rarely receive broad shareholder support, some companies are likely to concede or make compromise to reach an agreement before the matter comes to a vote. Trend to watch: withdrawals. 
• Disclosure of diversity information and use of diversity metrics in executive pay is expected to diminish, and board diversity considerations are likely to play a much smaller role this proxy season. 
• Amid rising complexity and diversity of viewpoints the investor community, boards can look to the fundamental principles of corporate governance to help guide their decisions: economic relevance of extra-financial factors, competent and independent boards, and alignment between pay and performance.