Sec rule changes weaken small shareholders’ power to drive corporate climate action

The Securities and Exchange Commission has implemented new restrictions that significantly limit small shareholders’ ability to pressure companies on climate issues, potentially ending an era of successful grassroots corporate activism. These changes come just five years after climate activists achieved a landmark victory by winning three board seats at Exxon Mobil, sparking similar shareholder revolts that forced major corporations to address climate change.

The SEC announced two key changes: it will stop providing guidance on whether companies must include shareholder proposals on voting ballots, and investors with less than $5 million in shares can no longer use the agency’s official online system to communicate with fellow shareholders about issues like climate action. The agency cited resource constraints and efforts to reduce regulatory burdens as reasons for the changes.

Environmental advocates warn these moves will silence corporate accountability efforts. “Shareholders are being cut out of the process,” says Steven Rothstein of sustainability nonprofit Ceres. Without SEC oversight, companies may feel emboldened to exclude climate-related proposals they oppose, since enforcement actions are rare and lawsuits remain expensive for smaller investors.

The changes particularly impact advocacy groups like As You Sow, which has written over 200 shareholder communications since 2018 on climate concerns. CEO Andrew Behar argues that limiting small investors’ tools removes incentives for companies to engage constructively with advocates. Critics worry this deregulatory trend could reduce market transparency and ultimately harm American capital markets by weakening the investor-company dialogue that has traditionally driven corporate accountability.