ESG Debate, Regulatory Shifts: ISS-Corporate Forecasts Key Themes for 2025 U.S. Proxy Season

ROCKVILLE, Md. (March 4, 2025) – ISS-Corporate, a leading provider of compensation, governance, cyber risk monitoring, and sustainability offerings to help companies improve shareholder value and reduce risk, today released an analysis of key trends and themes expected to shape the 2025 U.S. proxy season. Amid a shifting tide of shareholder and regulatory pressures, the report outlines a myriad of risks and conflicting stakeholder demands confronting boards this proxy season.

Key anticipated trends and early findings include:

• New guidance from the Securities and Exchange Commission (SEC), including a compliance and disclosure interpretation (CD&I) and Staff Legal Bulletin No. 14M (SLB 14M), may have significant implications for issuer-investor engagements and for shareholder proposals. The updated CD&I is prompting some investors to pause or change their engagement strategy and so issuers may face difficulties engaging with investors ahead of their shareholder meetings. SLB 14M rescinds a 2021 bulletin allowing for proposals that raise issues “with a broad societal impact” to move forward even if the significance to the subject company is limited. The new guidance requires, generally, shareholder proponents to make the case that the issue raised in a proposal is significant and material to the company, and it is expected that the guidance will potentially result in issuers omitting more proposals.
• Pushback against ESG and against diversity, equity and inclusion (DEI) is intensifying, and the surge of shareholder proposals critical of environmental or social initiatives (so-called “counter-ESG” proposals) is expected to continue. Early data as of February 21 shows 62 counter-ESG proposals submitted for 2025 shareholder meetings, representing 14.7 percent of all shareholder proposals submitted thus far. By comparison, counter-ESG proposals comprised 10.2 percent of all submitted shareholder proposals in 2024.
• Though these counter-ESG proposals have rarely received broad shareholder support in the past, with intensifying pressure against ESG initiatives, more companies may make concessions or reach agreements this year to have the proponents drop proposals. Observers should look to trends in withdrawals as the season progresses. Conversely, many of these proposals could be omitted under SLB 14M.
• In this environment, the report predicts that DEI-related considerations will play a smaller role relative to recent years. These considerations include the disclosure of diversity information in proxy statements, the use of diversity metrics in executive pay, and board diversity.
• Boards will face increased complexity and conflicting stakeholder demands this proxy season. The report suggests that boards can look to key principles of corporate governance for guidance, including the economic relevance of extra-financial factors; independent board oversight; board competency, including in cyber and AI; and the alignment between pay and performance.

“Norms and standards are shifting quickly, and many boards are having to navigate a slew of changes while attempting to meet complex and diverse expectations of their shareholders,” said Jun Frank, Managing Director and Global Head of Compensation & Governance Advisory at ISS-Corporate. “Under these conditions, it’s easy to lose sight of what matters to the company and its shareholders. Focusing on the fundamentals of corporate governance—economic relevance, robust and independent boards, and pay that’s aligned with performance—can act as a compass to navigate potentially confusing waters.”

Read the full analysis from ISS-Corporate here.

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About ISS-Corporate
Companies turn to ISS Corporate Solutions, Inc. (“ISS-Corporate”) for expertise in designing and managing governance, compensation, sustainability, and cyber risk programs that align with company goals, reduce risk, and manage the needs of a diverse shareholder base by delivering data, tools, and advisory services. ISS-Corporate’s global client base extends across North America, Europe, and Asia, as well as other established and emerging markets worldwide. ISS-Corporate is a wholly owned subsidiary of Institutional Shareholder Services Inc. (“ISS”) and part of the ISS STOXX GmbH group of companies. ISS Corporate provides advisory services, analytical tools and publications to companies to enable them to improve shareholder value and reduce risk through the adoption of improved corporate governance practices. The ISS STOXX Governance and ESG research teams, which are separate from ISS-Corporate, will not give preferential treatment to, and are under no obligation to support, any proxy proposal of a corporate issuer nor provide a favorable rating, assessment, and/or any other favorable results to a corporate issuer (whether or not that corporate issuer has purchased products or services from ISS Corporate). No statement from an employee of ISS-Corporate should be construed as a guarantee that ISS STOXX will recommend that its clients vote in favor of any particular proxy proposal or provide a favorable rating, assessment or other favorable result. For more information, please visit https://www.iss-corporate.com/. 

About ISS STOXX
ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently. ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of more than 3,800 professionals operating across 30 global locations in 20 countries. Its approximately 5,500 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders. 

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Audrey Dedrick
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