How an unpredictable political environment shaped 2025's AGM season

The 2025 Annual General Meeting (AGM) season was marked by an uncertain political environment, making it more complex for companies to anticipate and navigate the ever-changing political and regulatory landscape. US President Donald Trump’s tariff war and pushback against environmental and social issues, and Europe’s Omnibus directive - expected to substantially revise the scope, substance and timeline of flagship sustainability directives – were some of the key factors driving this uncertainty.

The volatile political environment also impacted investors’ stewardship approach, proxy voting, and engagement priorities during AGM season. 

ESG under the spotlight

A backlash against environmental, social and governance (ESG) issues in the US, further stoked by the new administration, meant shareholder ESG initiatives faced additional scrutiny and, at times, scepticism. Shareholder proposals are a commonly used tool by minority shareholders to engage with companies when raising awareness of environmental or social issues, and this year, they have been particularly under the spotlight:

• In February 2025, the US Securities and Exchange Commission (SEC) rescinded a policy put in place by President Joe Biden’s administration – SLB 14L - which had made it easier for shareholders to propose ESG resolutions. The new rules mark a return to a stricter definition of economic relevance and ordinary business rules, meaning companies can block certain shareholder proposals from their AGM agendas - for instance, those raising issues with a universal social impact such as climate change or human rights, but with a limited direct economic significance to the company itself. Notably, this led to lobbying-related proposals being rejected from the AGM agendas of five large US companies¹ and overall, a 42% increase in the number of proposals blocked by the SEC compared to 2024²
• The Business Roundtable, an association of chief executives of large US companies, publicly called for the US Congress and the SEC to preclude the inclusion of any shareholder proposal relating to environmental, social and political issues, and to strengthen submission and resubmission thresholds for proposals³
• In Texas, Senate Bill 1057, which came into effect in September 2025, significantly raised the submission threshold for filing shareholder proposals, making it much harder for minority shareholders to raise ESG concerns at Texas-based listed companies 

Anti-ESG proposals gain prominence but not votes

At the same time, proposals contra to ESG goals have become increasingly common in the US, in particular on social topics and diversity, equity and inclusion (DEI) initiatives. These constituted a large part of the anti-ESG proposals voted on in this year’s AGM season, compared to climate or governance-related resolutions, with a marked increase compared to 2024. However, they received an average of around 3% support from shareholders, indicating a lack of investor backing for such resolutions⁴. 

So, while proponents of anti-ESG proposals appear to be quite vocal, have looked for publicity, intensified their efforts and broadened their targets, shareholders appear to be largely unresponsive to these initiatives.

Some words of caution however: even when shareholder votes reject these proposals, anti-ESG advocates can use them to raise awareness and build momentum around what some perceive as drawbacks to ESG considerations. This may push companies to adopt a 'laying low' attitude, downplaying their ESG initiatives to avoid controversy - potentially undermining stakeholder trust, reducing accountability, and weakening investment in addressing systemic challenges.

It remains to be seen what the future holds for the shareholder proposal filing process in the US, but we expect the main impact to be reduced accountability from corporate boards and management to minority shareholders’ concerns. 

Management sustainability votes in Europe

Over recent years, European companies have included their own management-sponsored sustainability resolutions on the AGM agenda, offering an alternative way for shareholders to voice their concerns on a company’s sustainability strategy. One illustration of this is the ‘say on climate’ trend, where shareholders can approve or reject a company’s climate transition plan.

The number of companies putting this resolution to a shareholder vote has been in slight decline over the past couple of years, in some cases holding say on climate resolutions every three years instead of annually. Shifting investor expectations over rising political sensitivities may have also contributed to strategic recalibrations by some issuers, occasionally triggering tension with shareholders. For instance, while the energy sector played a leading role in the initial wave of such climate proposals, some high-emitting companies like Shell or TotalEnergies discontinued their annual climate votes in 2025.⁵

Moreover, we are beginning to see a gradual evolution in certain jurisdictions, with proposals expanding to address broader sustainability themes in countries such as Spain and Switzerland, where shareholder votes are tied to comprehensive sustainability reports. The Dutch corporate governance association, Eumedion, has been calling for an annual advisory vote on Dutch-listed companies’ statements under the Corporate Sustainability Reporting Directive⁶.

Navigating the DEI backlash

Diversity, equity, and inclusion initiatives faced immediate scrutiny during the first days of President Trump’s 2025 administration, following a series of executive orders targeting DEI programmes across both public and private sectors. Framed around “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,”⁷ these directives signalled a broad federal campaign to dismantle diversity policies, creating uncertainty about its impact on corporate and institutional inclusion efforts.

In response, many proxy advisors and large institutional investors revised their board diversity policies for the 2025 proxy season, eliminating fixed diversity quotas, softening voting penalties, removing references to specific gender or racial criteria, and introducing more flexible standards such as cognitive diversity and alignment with industry norms.

Navigating the DEI landscape has become increasingly complex for companies, as the scaling back of programmes has been a multifaceted trend rather than a uniform retreat. A noticeable wave of corporate conservatism has emerged, with several major US companies reducing DEI budgets, restructuring or renaming diversity departments, and moving away from explicit demographic metrics.

Conversely, some companies with international presence or strong social impact missions also chose to reaffirm their inclusion goals but used more neutral language and repositioned strategies using new terminologies such as “inclusion”, “culture”, “belonging”, and “equity”. In this context, 40% of S&P 500 companies revised or shortened their DEI-related content in 2025 compared to the prior year, opting for more generalised disclosures rather than removing them entirely.⁸

It will take time before it becomes clear whether these shifts represent a lasting transformation or a temporary reaction to evolving political pressures.

New opportunities

This uncertainty is not confined to the US, and the backlash against DEI initiatives also had an impact globally, prompting varied responses across regions and sectors. Given that diversity at both the board and senior management levels remains a key focus for many companies (and a regulatory requirement in most European markets), some international companies with a large presence in the US are facing the challenge of balancing their approach of setting and reporting against diversity targets to drive improvement, with legal concerns over such targets. There have been instances of European companies dropping their diversity and inclusion targets (while sometimes already meeting requirements), to remain compliant with the US law where they operate.

When AXA IM has engaged with companies on this topic, we have reaffirmed the financial materiality of DEI and human capital management and also aimed to better understand their risk exposure, approach, and impact on employee engagement and the ability of the company to attract talents.

The 2025 AGM season was therefore at times a bumpy ride, where political turbulence has caused market volatility and regulatory uncertainty for companies, and in some cases made it more difficult for shareholders to vote and engage in a responsible and effective manner. Ultimately, we believe this may lead to management entrenchment and reduced accountability to minority investors, at the expense of good governance and long-term sustainable value creation.

Navigating these challenging times will require some discipline. However, one of the lessons emerging from this year’s AGM season is that this complex and evolving landscape could also create opportunities for companies and issuers to distinguish themselves through better governance, strategic adaptability, and enhanced crisis management capabilities.