More than a year into the second Trump administration, which kicked off with a flurry of anti-diversity, equity and inclusion initiatives, investor pushback against corporate DEI policies has notched notable wins at giant firms.
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But both conservative and liberal groups are now expressing concern that the Securities and Exchange Commission is moving to limit shareholder rights such as proxy voting and public disclosure filings. Conservative shareholders have used those mechanisms in proxy campaigns taking the same policy stance as the administration’s executive orders targeting DEI efforts in government and business.
That puts recent DEI and ESG investing developments — including Vanguard’s nearly $30 million settlement with state attorneys general over ESG claims and firms like Goldman Sachs, American Express, John Deere, Colgate-Palmolive and Johnson & Johnson removing DEI criteria from their board selection processes — in a fresh context.
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The SEC and shareholders fight over proxy fights
On the one hand, conservatives can point to moves toward the “best interests of shareholder returns” and avoiding “divisive politics that had no bearing on running the business responsibly,” according to Paul Chesser, the director of the Corporate Integrity Project at the National Legal and Policy Center (NLPC), a conservative advocacy group that successfully urged Goldman and other firms to alter their board selection policies.
On the other, the group has found common cause with left-leaning groups that argue the SEC is going too far under Chairman Paul Atkins in providing more leeway for companies to restrict shareholders’ rights. Among other methods of communicating its opposition, the NLPC criticized the SEC’s proxy shifts and shareholder filing constraints in a meeting with Commissioner Hester Peirce, Chesser noted. The group characterized the current SEC as “Where Billionaires and Their Woke Corporate Allies Find Protection” in a blog post in late January.
“They don’t have any sympathy for us, as far as we can tell,” he told Financial Planning. You have to participate in the debate or engage in the battlefield, if you will, as it is — not as you wish it to be. So that’s one reason why we do what we do. … Our agenda on DEI largely aligns with President Trump’s agenda, but now the SEC leadership that he has put in place is working against that agenda.”
Representatives for the SEC didn’t respond to inquiries.
The NLPC specifically pointed to the SEC’s January staff interpretation, which objected to the inclusion of shareholder documents called “notices of exempt solicitation” in companies’ filings in the agency’s public database, and to the SEC’s November announcement that its Division of Corporation Finance would no longer take any position on firms’ stated rationales for excluding certain shareholders’ proposals from a proxy vote. Critics have also slammed the SEC’s September statement that said mandatory arbitration of shareholder claims against newly public companies is “not inconsistent with the federal securities laws,” in Atkins’ words, and another determination that gave Exxon Mobil a green light to solicit shareholders to give the company a standing vote on management’s side in any proxy vote.
In other words, what began as a conservative populist rallying cry has turned into an esoteric fight.
Proxy filings represent “a necessary part of the legal rights of a shareholder,” said David Bahnsen, the founder, managing partner and chief investment officer of Newport Beach, California-based advisory firm The Bahnsen Group, where he submitted roughly a dozen shareholder proposals in 2025.
But, in some cases, shareholders with “tiny” holdings in a firm apply those rights as a “tactic for political activism,” Bahnsen said. And that is what the SEC is trying to strip from the proxy process.
“The SEC is trying to figure out how to do this without undermining legal shareholder rights,” Bahnsen said.
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Ongoing momentum?
Regardless, Bahnsen and others are praising the momentum of companies away from ESG and DEI policies they viewed as hurting the firms’ businesses.
Similar to fields like the media and academia, liberal organizations and shareholders have been nudging companies to take political positions that can ultimately alienate customers, according to Chesser. He cited basketball legend Michael Jordan’s reluctance to talk about politics publicly, since as Jordan once put it, “Republicans buy sneakers, too.” (Jordan has described the quote as “off the cuff.”)
“There were just so many things that the political left was successful in leveraging to shift corporate America,” Chesser said, pointing out the possible reputational and litigation risks to companies and their shareholders. “When you antagonize potentially half your customer base, you’re running into the danger zone.”
Corporate retreats from ESG and DEI efforts reflect “more and more meritocratic policies” over forced quotas, according to Bahnsen, who said he wonders how much of it has to do with a “changing cultural vibe and response to the administration’s dictums and priorities.” Much of the impact to companies’ profits will come from the removal of bureaucracy from their organizations and their hiring of vendors under DEI criteria, he said.
“There’s no question that the needle has continued to move,” Bahnsen said. “At the peak of DEI, it was always unclear to me how much they really believed in it.”
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