The SEC has tightened its role as a gatekeeper for shareholder proposals, making it harder for activists to push votes on social and political issues like climate policy and diversity. This change coincides with the agency’s rollback of climate disclosure regulations and a more crypto-friendly stance, signaling a broader shift toward deregulation and corporate autonomy. Meanwhile, the EU has, so far, continued to maintain strong shareholder rights and ESG transparency.
The U.S. Securities and Exchange Commission (SEC) has long served as a gatekeeper for shareholder proposals, determining which issues make it to a vote during corporate meetings. Traditionally, this process has allowed investors—even those with relatively small stakes—to push companies to address social and ethical concerns. However, new SEC guidance is making it harder for activist shareholders to bring proposals on politically charged topics like climate change, gun policies, and diversity initiatives. (SEC.gov | Shareholder Proposals: Staff Legal Bulletin No. 14M (CF))
Under the new rules, businesses will have more power to block proposals they claim interfere with management decisions or amount to shareholder "micromanagement." This marks a reversal of Biden-era policies that encouraged broader shareholder participation. Critics, including Democratic Commissioner Crenshaw, argue the change comes at an inopportune time and stifles corporate democracy, reducing investor influence over key issues. (SEC.gov | Statement on Staff Legal Bulletin 14M)
This shift comes as the SEC, now under GOP control, is also rolling back other regulatory measures. Acting SEC Chairman Mark Uyeda recently began dismantling the agency’s landmark climate disclosure regulations, which required companies to be more transparent about their environmental impact. (S.E.C. Moves to Kill Climate Disclosure Rule - The New York Times) At the same time, the commission has signaled a friendlier stance toward cryptocurrency, suggesting a broader deregulatory agenda. (SEC.gov | SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force)
With these moves, the SEC is reshaping how corporations engage with investors—limiting shareholder influence while loosening regulatory constraints on businesses. Whether this leads to greater corporate efficiency or less accountability remains a point of debate.
In Europe, there isn't a single equivalent to the SEC, but financial markets are regulated through a combination of EU-wide and national authorities. The closest equivalent is the European Securities and Markets Authority (ESMA).
Unlike the SEC, the ESMA does not directly regulate shareholder proposals the way the SEC does. This responsibility lies with national regulators.
Each EU country has its own financial regulator with some autonomy. Germany, for example, has the Federal Financial Supervisory Authority (BaFin), France has the Autorité des marchés financiers (AMF), the UK has the Financial Conduct Authority (FCA) and the Netherlands has the Autoriteit Financiële Markten (AFM).
Indirectly, the EU does facilitate EU shareholder influence, including on ESG issues.
In the EU, various directives and regulations regulate shareholder proposals and ESG. For example, the Shareholder Rights Directive II (SRD II) strengthens shareholder rights and increases transparency in corporate governance, and the Corporate Sustainability Reporting Directive (CSRD) requires large companies to disclose sustainability data, making it harder for firms to ignore ESG concerns.
While the SEC is tightening its grip on shareholder proposals, limiting investor influence in corporate governance, the member countries of the EU, guided by the ESMA, are holding steady—reinforcing shareholder rights and ESG transparency. As US companies gain more control over their agendas, European firms continue to face strong investor scrutiny. It remains to be seen whether the EU will follow the US’s lead or move in the opposite direction. All that is certain is that the balance between corporate autonomy and shareholder activism will continue to evolve on both sides of the Atlantic.
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