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E-MailJessye Waxman is a Campaign Advisor with the Sustainable Finance campaign at the Sierra Club. This post is based on her Sierra Club memorandum.
The 2026 shareholder season has arrived in the midst of an ongoing battle for shareholder rights and at a consequential moment for corporate governance. Over the 15 months, the current administration has undertaken a series of efforts that collectively narrow shareholder rights, undermine climate-related disclosure frameworks, and constrain investors’ ability to engage on financially material ESG issues. At the same time, climate-related financial risks continue to intensify, increasing the importance of investor oversight of long-term corporate strategy and risk management.
Moments in which oversight mechanisms and participatory rights are being eroded often create pressure for institutions to remain quiet and adapt to shifting political expectations. But, history has repeatedly shown that silence in the face of incremental restrictions on transparency and participation rarely preserves institutional rights in the long-run. In practice, the absence of resistance is often interpreted as acceptance, encouraging continued efforts to further erode rights.
It is against this backdrop that the 2026 AGM season arrives. Proxy voting has long served as one of the primary mechanisms through which shareholders communicate expectations around corporate governance, risk oversight, and long-term value creation. AGM season provides investors with an important opportunity to weigh in on how companies are managing emerging and systemic risks, which fall under the umbrella of ESG issues that are increasingly coming under attack.
For long-term investors, engagement on these issues has always been an important component of prudent risk management. But in an environment where shareholder engagement rights themselves are increasingly under pressure, supporting proxy ballot measures related to climate and other financially material ESG risks takes on added significance. The current proxy season therefore presents investors with an opportunity not only to engage company leadership on the disclosure – and management – long-term risks, but also to signal to policymakers that investors want to retain their shareholder rights, preserve access to decision-useful disclosures, and reaffirm that these issues remain financially material to long-term portfolio performance.
The Joint Erosion of Shareholder Rights and Climate Accountability: Complementary Efforts to Undermine Investors’ Ability to Manage Material Risks
Since coming into office, the Trump administration has undertaken a series of regulatory and policy actions to reshape the scope of investor engagement in public markets. This has come through joint attacks on shareholder rights and on investors’ ability to engage on financially material ESG issues, including those related to climate risks.
Some of the most targeted attacks have been focused on climate disclosures and interpretations of fiduciary duty as it relates to material ESG risk. Only a year after the SEC adopted the Climate Disclosure Rule, the agency announced it would no longer defend it. This comes after years of investor engagement to promote both voluntary and federally-mandated disclosures of decision-useful climate reporting. Earlier this month, the agency shared further steps: a formal proposal to rescind the Climate Disclosure Rule. The executive order on “Protecting American Energy from State Overreach” has further compounded these developments by challenging the implementation of state-level climate disclosure regimes, including California’s climate disclosure laws, which would have served as an effective backstop against the SEC’s rollbacks. In parallel, recent measures to scale back Regulation S-K disclosures will likely be seen to serve a similar purpose, given that most issuers currently disclose climate-related risks and opportunities in filings governed by Regulation S-K.
At the same time, efforts to redefine fiduciary duty under ERISA seek to narrow the extent to which investors may consider ESG factors in investment decision-making, despite decades of market practice and a growing body of evidence indicating that environmental, social, and governance risks can be financially material.
Unsurprisingly, these actions reflect a coordinated effort to narrow investors’ ability to better understand, engage with, and take effective steps to manage material ESG risks, climate-related risks primarily among them.
These efforts are being further compounded by the administration’s rollback of various shareholder rights. While the erosion of shareholder rights are problematic in-and-of themselves, are also not-so-thinly-veiled efforts to limit shareholders engagement on financially material issues, like climate-related risks. Changes in SEC guidance will now make it more burdensome for the largest investors (holding over 5% of shares) to engage with portfolio companies on material ESG issues. The SEC’s withdrawal of guidance distinguishing ESG engagement from efforts at control, combined with former SEC Acting Chairman Mark Uyeda’s comments that “asset managers’ voting policies on ESG matters may qualify as attempts to exert control over management” suggest that this more burdensome reporting requirements may be triggered by voting proxies on ESG issues. While, on its face, this threshold limits only the activities of the largest asset managers, a substantial number of institutional asset owners participate in markets and have their proxies voted through investment vehicles managed by these largest investors. In parallel, executive actions aimed at limiting the influence of proxy advisory firms on ESG matters introduce additional constraints on the infrastructure that many institutional investors rely on to inform and execute voting decisions. Taken together, these have the practical effect of making it more difficult and less likely that the majority of institutional investors will be able to use proxy voting as an effective tool for addressing material ESG-related risks, including climate-related risks.
At the same time, changes to the SEC’s “no-action” process have reduced the predictability and consistency of shareholder proposal inclusion, making it easier for issuers to exclude material ESG proposals from proxy ballots, further limiting the opportunities for investors to engage on issues that pose material risk to either the company, long-term portfolios, or both.
They reflect a broader pattern in which shareholder rights and climate accountability are being constrained through overlapping channels. Climate risk oversight has become one of the central domains through which investors exercise stewardship over long-term portfolio value and, relatedly, exercise their right to engage on material ESG issues. Efforts to restrict climate-related disclosure, limit shareholder proposals on climate strategy, and reduce the influence of investor engagement tools are not merely regulatory adjustments, but substantial constraints on the ability of shareholders to assess and manage material financial risks.
In this sense, the erosion of shareholder rights and the weakening of climate accountability mechanisms are not parallel developments, but a positive feedback loop in which the erosion of one reinforces the erosion of the another. The narrowing of shareholder engagement channels limits investors’ ability to surface and act on climate-related risks, while the forcibly reduced emphasis on climate further weakens the perceived justification for robust shareholder participation on these issues.
Against this backdrop, it becomes all the more important for investors to actively engage during this year’s AGM season and to support climate-related proposals. Doing so is not only consistent with sound risk management and responsible corporate governance; it also serves as a clear expression that investors seek to preserve meaningful shareholder rights both in general and in relation to the specific systemic risks that increasingly shape long-term portfolio outcomes.
Investor Engagement in AGM Season Matters More This Year
Voting proxies in support of climate accountability at company meetings during this year’s AGM season is therefore not only important for the reasons it has traditionally been important – as a tool for managing ESG-related risks – but also because voting itself carries broader significance in the current regulatory climate. By actively voting on climate-related shareholder resolutions and director elections, investors are doing more than weighing in on individual company practices; they are also signaling that shareholders expect to retain meaningful rights to engage on long-term systemic risks that affect portfolio performance. This is why supporting the wide range of climate-related votes appearing on ballots this year matters more than ever.
The climate-related votes appearing in this year’s AGM season therefore provide important information into both the involving priorities of investors and the ways in which investors can – and should – engage to advance the mitigation of climate-related risks. Proxy voting has value insofar as investors are willing to meaningfully exercise judgement on the issues before them. Simply defaulting to management recommendations of limited action on climate-related matters, especially in the current climate, risks reinforcing the broader erosion of shareholder rights to engagement. Rather, active support for material climate-related votes serves a dual purpose this year: advances efforts to manage systemic risks and reaffirms that shareholders view voting and engaging on ESG-related matters as a right that they expect to maintain. The range of proposals filed this year – and the extent to which investors support them – matters not only because of the materiality of the underlying issue (eg climate), but because these votes increasingly represent one of the remaining avenues through which investors can exercise shareholder oversight.
Despite the current political and regulatory climate’s notable impact on reducing the number of ESG resolutions filed this year, the current season reflects a notable diversity of climate and sustainability resolutions. Resolutions seeking greater transparency on climate and sustainability have become more expansive compared to the prior year, ranging from reports on biodiversity impacts, to disclosures of management strategies for declining oil and gas demand, to delineating climate risks to employee retirement plans. The range of these filings underscores that investor demand for decision-useful climate disclosure is not only persistent, but has become more sophisticated, as investors grow to understand climate-related risks and risk management strategies better.
There is also a growing emphasis on action-oriented proposals that call not just for disclosure, but for demonstration of concrete changes to corporate strategy and business plans that meaningfully address and mitigate the risks created by corporate externalities. For long-term investors, this distinction is significant. Climate-related risks increasingly manifest not only at the company-level, but across entire portfolios through macroeconomic volatility. As a result, proposals focused on advancing implementation are an increasingly important tool for investors seeking to mitigate both asset-specific and systemic risks.
Complementing shareholder proposals is the opportunity to weigh in on director accountability. Boards of directors are ultimately responsible for overseeing corporate strategy and risk management, including oversight of climate-related risk management. In cases where companies have failed to demonstrate meaningful progress after years of investor engagement, voting against the reelection of directors provides an additional means for expressing concern over corporate strategy, something particularly important in a year when fewer shareholder resolutions on climate accountability are being filed. (Recent voting trends encouragingly suggest a growing willingness among investors to exercise this lever. Sierra Club’s most recent analysis of public pensions’ proxy voting performance found more US pensions voted against corporate boards of directors for climate-related oversight failures in 2025, a trend supported by research from Glass Lewis showing that the overwhelming majority of investors take non-traditional financial factors into account in informing their voting decision for director elections.)
Systemic Climate Risks and Institutional Investors During AGM 2026
Despite what the current administration would like to believe, climate-related risks to long-term portfolios continue to grow. Contrary to conventional risk management strategies, climate-related risks don’t manifest merely at the level of individual holdings, but compounding climate impacts across sectors, supply chains, and geographies lead to long-term macroeconomic disruption that is set to impact entire portfolios. A growing body of research highlights the unprecedented anticipated repercussions to portfolio valuation of long-term, diversified investors under a business-as-usual scenario.
In this context, shareholder engagement – including via proxy voting – remains an essential mechanism through which investors can signal expectations for improved disclosures, strategic alignment, and board oversight. In a regulatory landscape seeking to limit both investor access to relevant disclosures and investor engagement on these issues, the importance of executing proxy votings in support of climate accountability is heightened.
Conclusion
The convergence of attacks on shareholder rights and on climate-related corporate accountability should be concerning to any and all inventors. The current administration’s efforts are a strategic and coordinated attack on investors’ ability to assess, price, and manage climate-related risks effectively.
In this environment, investor support for climate-related shareholder proposals and director accountability is not just a critical risk management move, but a public signal that investors support both market transparency and corporate accountability on climate risk management. By taking these votes, investors would be “speaking up” with a desire to retain their rights as shareholders and reinforcing the principle that financially material risks – including climate-related risks – remain central to fiduciary oversight.
By contrast, choosing not to engage on matters of consequence may carry its own consequences. Reduced engagement or failing to support these prudent risk management measures may signal acquiescence to a governance environment in which both shareholder democracy and climate accountability are progressively weakened. In a year marked by coordinated pressures on investor rights and sustainability-related disclosure, the choices made during the 2026 AGM season will carry implications not only for individual companies, but for the broader architecture of shareholder stewardship in public markets.
In a year marked by attacks on both climate and shareholder rights, investor silence this AGM season would be the loudest signal of all.
