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

The Impact of Updated SEC Guidance on 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).