The current administration has hit the ground running with policy changes designed to stymie shareholder engagement and corporate accountability, with particularly visible and harmful attacks targeting corporate progress on racial equity. Our opponents laid the groundwork for these actions through bills passed by the House of Representatives last Congress and Project 2025.

One of the first executive orders Trump issued tasked the Attorney General with writing a report with recommendations on how to encourage the private sector to end diversity, equity, and inclusion (DEI) initiatives. It also tasked the Attorney General and other agency heads with coming up with a “strategic enforcement plan” to “deter DEI programs or principles.” While a judge temporarily blocked implementation of portions of this and another anti-DEI executive order, many large corporations quickly pulled away from their DEI initiatives.

Meanwhile, the Securities and Exchange Commission (SEC) took various steps to tilt the shareholder advocacy playing field in favor of corporate boards and executives and against shareholders pushing them to address important risks. First, the SEC wreaked havoc by updating a Q&A that, in effect, incentivizes large asset managers to cast pro-management votes and halt any positive engagements with companies on critical issues shareholder advocates have put to the fore. It does so by expanding the types of shareholder advocacy that could be construed as “changing or influencing” control of a company, which would trigger further regulatory requirements from investors who own over 5% of a company’s shares. Following the release of the Q&A, BlackRock and Vanguard temporarily halted meetings with companies.

The SEC also made it harder for shareholder proponents to get their voices heard by issuing Staff Legal Bulletin 14M, which changed how the SEC staff evaluates company requests to effectively let them exclude shareholder proposals from proxy statements. As Commissioner Crenshaw noted, this bulletin “moves the goalposts smack dab in the middle of this year’s shareholder proposal process.” She also noted that corporations will be able to make additional arguments to exclude shareholder proposals while shareholders won’t be able to change their proposals to be in line with the parameters set by the new legal bulletin.

Unfortunately, we can expect more actions by the SEC to further incentivize asset managers to cast pro-management votes, coerce proxy advisors to recommend pro-management votes, weaken corporate disclosures, and make it harder for shareholder proponents to get their proposals in proxy statements.

We can also expect detrimental shifts in policy from the Department of Labor as it will likely attempt to rescind a Biden-era rule that makes clear ERISA fiduciaries can take into account relevant environmental, social, and governance factors when making investment decisions and encourages fiduciaries to exercise shareholder rights, including proxy voting. Republican Attorneys General sued to block the rule, but a district court judge in Texas has upheld the rule twice, including this past February.

As the policy terrain continues to shift, shareholder advocates will have to remain vigilant and experiment with new strategies to get their voices heard and make change.