FIRST ON THE DAILY SIGNAL – The Securities and Exchange Commission could make it tougher for shareholders to challenge left-leaning corporate policies that promote diversity, equity, and inclusion, as well as environmental issues, a conservative watchdog group asserts.
SEC Chairman Paul Atkins in November suggested making it easier for corporations to block shareholder proposals from being heard and voted on at annual shareholder meetings.
Atkins, appointed by President Donald Trump in January and confirmed by the Senate in April, also suggested allowing the state where a company is based to decide what is appropriate for shareholder consideration.
However, in a 10-page letter to Atkins shared with The Daily Signal, National Legal and Policy Center President Peter Flaherty argued that conservatives have successfully challenged DEI, and ESG–short for environment, social governance–policies at large, publicly traded companies.
Atkins’ proposals could remove the very tools conservatives used to stop these policies, he added.
“We share your concerns about the proliferation of proposals that appear to advance irrelevant ideological agendas. However, the solution cannot be to dismantle the mechanism itself,” Flaherty wrote.
Specifically at issue is SEC Rule 14a-8, which is the mechanism for shareholders to submit proposals for a publicly traded company’s annual meeting. The rule also includes guidelines for a company to exclude the proposal from the annual meeting if it is determined irrelevant to the company’s business.
Flaherty described the shareholder process as “an explicitly capitalist institution” when “properly constrained.”
“It is voluntary, firm-specific, and mediated by the discipline of capital markets,” he wrote.
Flaherty warned that the proposed changes to thwart more shareholder proposals would weaken the rights of ordinary investors and could effectively entrench the power of large investment institutions such as BlackRock.
The National Legal and Policy Center has pointed to recent conservative victories in pushing corporations such as Target and Cracker Barrel to abandon leftist policies. Numerous other companies rolled back DEI policies in 2024 and 2025, according to Forbes.
The policy change floated would also affect shareholder proposals coming from the left. Yet Flaherty argued that corporate managers are still largely inclined to push these policies, and shareholders need a tool to push back.
“When Chairman Atkins suppresses the dissent of shareholders and makes corporate managers less accountable, he is not supporting our side,” Flaherty told The Daily Signal. “The managerial class is overwhelmingly liberal. They know each other, went to the same schools, and serve on each other’s boards.”
“Taking on DEI, ESG, and stopping debanking are all part of the president’s agenda,” Flaherty added. “It’s a shame [Atkins] is undercutting our efforts.”
In a speech at the University of Delaware in October, Atkins also suggested a shareholder proposal might not be proper for consideration if it isn’t permissible under state law.
“State law governs whether a proposal is a ‘proper subject,’” Atkins said, adding that “it is appropriate for the agency to defer to those who practice Delaware law” to determine whether a proposal could be considered there.
Then on Nov. 17, the SEC announced a policy change whereby it would acknowledge a company’s intent to exclude shareholder proposals, but would not make a ruling on it.
Conservative watchdogs like Flaherty consider that effectively a rubber stamp for the company and a departure from the past, when the shareholder and company would submit legal arguments to exclude proposals and the SEC would decide.
Audrey Barr, senior communications advisor for the SEC, declined to comment on the issues raised by Flaherty.
Flaherty noted in the letter that providing more deference to states could give the state of Delaware enhanced influence, since so many companies are incorporated in the state.
