How Shareholder Advocacy and Proxy Voting Can Drive Meaningful Change — and How You Can Help Protect It

Activism and Impact in an Environment of Hostility and Misinformation 

Shareholder advocacy and proxy voting are critical tools equity investors use to influence corporate decision-making and drive systems-level change. As stockholders and, thus, part owners of the companies they invest in — sharing in both the risks and rewards of ownership — equity investors have the right to weigh in on management and governance. For social investors, shareholder advocacy provides a powerful mechanism to push companies toward responsible practices and help shape industry-wide standards. 

Recently, the Trump administration proposed shifts to undermine the effectiveness of shareholder advocacy. Beginning in 2025 and continuing in 2026, the administration and the U.S. Securities and Exchange Commission (SEC) have issued significant changes to shareholders’ rights and proxy voting regulations, shifting long-standing processes and resources in material ways. The rights of equity investors to have a say in the companies they own stock in are being curtailed in key ways, limiting stockholders’ ability to help shape corporations’ social and environmental impact.   

At Clean Yield, we are dedicated to protecting our clients’ best interests and advocating for their values, and we are part of a broader ecosystem that exercises and promotes shareholder rights. (Read more about our take on proxy voting in our recent article, Proxy Voting: A Critical Tool for Individuals and Investors to Influence Corporate Behavior.) 

Recently, Elizabeth Levy, Clean Yield Managing Director and Portfolio Manager, spoke with Sanford Lewis, an attorney with over 40 years of experience in public policy-related issues, director of the Shareholder Rights Group, and a leading national expert on shareholder proposals and corporate duties of disclosure of environmental and social issues in securities filings. 

In the conversation, embedded and excerpted below, Sanford and Elizabeth explore how asset managers, advocates, and investors can use advocacy and proxy voting to have a meaningful, positive impact, what changes they expect in light of recent and ongoing regulatory shifts, and ways people can continue to sustain the effectiveness of these powerful engagement strategies.  

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Elizabeth: Thanks for speaking with me, Sanford. To start, can you share your perspective on shareholder engagement and its impact on companies and the broader world?  

Sanford: Of course. Shareholder engagement often focuses on elevating environmental and social issues, and it’s a broadly impactful process.  

Environmental proposals may ask companies to report on their greenhouse gas emissions, for example, or to disclose their impact on biodiversity or on water supply in the communities where they operate. For social issues, a few examples of the types of proposals we see would include whether a tech company is working to prevent online abuse of children, the risks of producing products in China due to the use of forced labor, or the role of pharmaceutical companies in marketing opioids.  

What’s really important to know in terms of impact is that these proposals don’t affect only the company that is the subject of the proposal. They define best practices. Other companies see the outcomes or improved practices at a company that receives a shareholder proposal and, in many instances, elevate their own practices to match those of their peers. In this way, these proposals help shape and advance systems-level change.  

Elizabeth: Under the Trump administration, there have been a number of sudden and surprising changes to processes around shareholder advocacy and proxy voting. Can you summarize these changes for us? 

Sanford: Yes, we have certainly seen some shocking shifts. Toward the beginning of last year, the SEC suddenly changed its interpretation of the rules by eliminating something called Staff ​​Legal Bulletin 14L, which had defined how to interpret what’s an excludable proposal [meaning that a company can leave a proposal that it received from shareholders off of the list of items for other shareowners to vote on at the annual meeting] on issues like ordinary business or micromanagement, or whether the proposal is relevant to the company. This shift was particularly shocking because the SEC changed the rule after shareholders had already written their proposals for the season, so proposals were no longer being judged by the guidelines under which they had been written.  

As the year went on, more changes happened. In early October, the SEC Chairman said he felt proposals that are ‘advisory’ might not be appropriate under Delaware law—there’s an interplay between SEC and state law requirements. Well, that ‘advisory’ description applies to 98% of filed proposals, so this statement sent a panic through the shareholder proposal community. Next, in November, the SEC’s Division of Corporation Finance announced that it wouldn’t referee whether proposals were excludable for the coming season. This news was also shocking because the Division of Corporation Finance staff has typically played a critical role in drafting informal decisions known as ‘no-action decisions.’  

Because of these unexpected changes, we’re now in the middle of a season in which decisions aren’t being issued, creating significant uncertainty for shareholders and companies alike. 

Elizabeth: I know your organization, the Shareholder Rights Group, has been working to track and analyze the impact of these changes. In your view, who are these changes benefiting? Who are they hurting? 

Sanford: These changes benefit those who prioritize short-term thinking and profits over long-term value creation, so they’re essentially supporting the oligarchs. Their impact is to reduce the influence of, and even shut out, smaller investors who want to influence companies. They are making it harder for smaller investors to file proposals, underscoring the idea that you need a lot of money to have any influence.  

I should also add that the whole shift is built on a distortion of facts about the shareholder proposal process. It’s become a challenge to keep up with the disinformation flooding the market. 

Elizabeth: What should we expect in the coming months and years? Do you anticipate more changes?  

Sanford: Going forward, we expect to see continued escalation of this process. In December, the White House issued an executive order targeting proxy advisors who evaluate these proposals and urged the SEC to consider refining the shareholder proposal rule.  

Shareholders should be prepared for a time in the near future when investors will need to come together to fight back and preserve our rights as company owners. We’ll have to mobilize significant communications to the SEC against what could be a very harmful and extreme rule proposal.  

Elizabeth: Is there anything those of us committed to defending shareholder rights can do right now?  

Sanford: The shareholder rights group I direct was founded by market leaders such as Clean Yield and other organizations that are leading proponents of shareholder proposals.  

Our organization is continuing to provide thought leadership and doing detailed analysis that individual clients might not be able to do. In the near future, we expect there’s going to come a point where we’re going to have to mobilize a lot of letter writing to the SEC against what could be a very harmful rule proposal. We’re evaluating what’s happened and the impact it’s having this season, and responding to a lot of these distorted narratives.  

Stay up to date on what’s happening in the field, campaigns for letter writing or other actions, and how to donate to support the work at investorrightsforum.com or shareholderrightsgroup.com.