The balance of power is moving:

Should shareholders be concerned? 

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Article Type
The Wider Lens
Topic
Responsible Investing
Published
April 21, 2026
Read time
4 mins
Author
Miranda Beacham
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The Wider Lens

 

Looking beyond the bottom line for incisive, responsible investment insights

 

Welcome to The Wider Lens, where we share fresh thinking on all things related to responsible investing. Formerly the Sustainability Soapbox, the new name reflects the broader scope of our content, covering everything from climate insights and ethical issues to stewardship, ESG and more.

 

The balance of power is moving: Should shareholders be concerned?  

 

Concerns first emerged with changes to the US Securities and Exchange Commission (SEC’s) ‘No Action Review’ process. Previously, companies would need to seek permission from the SEC to exclude a shareholder proposal from their AGM agenda, which would be considered on a legal basis. In effect, the SEC acted as the gatekeepers of the market for shareholder resolutions.  

 

In November 2025, the SEC announced that it would no longer provide responses to these requests. This change shifted discretion to companies themselves over whether to exclude or not. The immediate reaction among investors was one of alarm, with fears that this would effectively signal the end for shareholder resolutions, particularly those related to environmental and social topics. 

 

So far, however, this is not really happening as quickly as feared. While the number of environmental and social proposals is lower than at the same point in 2025, volumes appear to be holding up more steadily than anticipated. Many companies are nervous to take full advantage of this newfound freedom for fear of legal ramifications and possibly with good reason. Companies, including AT&T, PepsiCo and Starbucks are currently facing lawsuits for not including resolutions on workforce demographics, political donations and animal welfare (worth noting that PepsiCo has since allowed its proposal onto the agenda). Starbucks is interesting in that it is being criticised for allowing a resolution on transgender healthcare coverage to remain on the agenda when they had the option to remove it.

 

If the SEC’s intention was to simplify the whole process of inclusion/exclusion, the outcome appears to be the opposite. The process has become more complex, more contentious and arguably more costly for corporates. 

 

Additionally, where companies exclude resolutions on unsatisfactory legal grounds, the second order impact is voting against directors – creating an even greater distraction for boards. Whereas allowing these matters to go to a vote may have been less time-consuming and would have allowed shareholders to be heard. 


Mandatory arbitration 

 

Another worrying development was the SEC ruling of September 17, 2025, which effectively allowed mandatory arbitration clauses in articles of association.

 

Mandatory arbitration requires shareholders to resolve specified disputes through private arbitration rather than through the courts. These proceedings are typically private, binding, and non‑appealable. In practice, such clauses are often designed to target securities law and disclosure claims, meaning class actions trying to claw back shareholder losses could be in trouble if adoption becomes widespread.

 

While not all US states allow mandatory arbitration, an increasing number of companies are seeking to change jurisdiction, so this could become a bigger problem. 

 

In short, shareholders are increasingly restricted in what can be placed on a general meeting agenda and how legal disputes can be resolved. Accountability is being diluted on two fronts, with power continuing to shift towards corporate management rather than the owners of the business.

 

What else could go wrong?


Retail voting and the rise of management aligned power 

 

In September 2025, the SEC permitted ExxonMobil to introduce a retail voting programme. This was the first of its kind.  The programme allows retail shareholders to opt-in to having their shares automatically voted in line with management’s recommendations on an ongoing basis.

 

The reasoning behind this was Exxon’s high retail ownership (around 33%) combined with relatively poor engagement levels. So, this was presented as a mechanism to make it simpler for retail shareholders to vote. However, because the programme is on an ongoing basis, this means there needs to be a high degree of trust that management will always act in shareholders’ best interests. A study of past corporate governance failures sadly proves that such trust is not always well placed. The result of this is a further shift of power from engaged shareholders to management, by converting passive retail shareholders to a management aligned voting bloc. The SEC action has effectively set a precedent, and its likely other corporations will follow suit in the years ahead.

 

While the changes to the ‘No Action Review’ may not have proved as damaging as first thought, there are plenty of other elements of US corporate governance that are giving us reason for concern. What becomes fashionable in the US often makes its way across the Atlantic. A glance at the recent BP AGM suggests that this trend may already have started.  

 

Important information

Author

Miranda Beacham
Head of UK Responsible Investment
Miranda Beacham is Head of Responsible Investment at AAM UK.  Her role involves overseeing the environmental, social and governance research process for ethical and sustainable funds as well as overseeing the stewardship activities, supporting the ESG integration processes and further research in ESG issues for investments across Aegon AM UK.
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