When U.S. Securities and Exchange Commission Chairman Paul Atkins recently suggested eliminating shareholder proposals in order to “depoliticize” corporate governance, he shocked the business community. The idea sounds tidy—remove the political noise, and companies can return to focusing on profits. But ending shareholder proposals would almost certainly have the opposite effect. It would further entrench corporate politicization rather than reduce it.
To understand why, consider what shareholder proposals are. Under existing SEC rules, shareholders who meet ownership and procedural requirements may submit proposals for a vote at annual meetings. Most of these are precatory, meaning they request the board do something as opposed to directing it to do so. They serve as a key mechanism for shareholders to express concerns, draw attention to risks, and influence company behavior within the boundaries of corporate law, which typically vests ultimate decision-making in the board of directors.
Critics claim these proposals have become vehicles for political agendas, and it’s true that shareholder meetings often feature both pro- and anti-ESG proposals, or dueling submissions on diversity, equity, and inclusion (DEI). But the mere existence of ideological diversity in proposals doesn’t mean the process is broken. In fact, it arguably means shareholder democracy is functioning as intended—allowing a range of investors to voice perspectives on how corporate policies affect value and reputation.
Ending shareholder proposals now would likely not depoliticize the boardroom. Rather, it would silence one of the few checks on corporate politics already entrenched inside the house. And while I clearly have a dog in this fight, given that I work for the National Center for Public Policy Research, which has been described in the Harvard Law School Forum on Corporate Governance as “the main player” submitting anti-ESG proposals, I trust the reader will keep an open mind in considering the following arguments.
The Real Source of Corporate Politics
Consider Google and Apple. Their alignment with progressive social causes—the Human Rights Campaign’s transgender advocacy, or the Southern Poverty Law Center’s political labeling—was not the result of shareholder votes. These initiatives emerged internally, driven by executives and employees who share ideological leanings. Corporate politicization, in other words, is largely an inside job.
So, while it’s true that some activist shareholders have used the proposal process to push social agendas, those efforts have already achieved much of what they sought. ESG frameworks and DEI metrics are now embedded in the operations of most major corporations, even as those terms undergo rebranding. There is at least some reason to conclude that left’s shareholder proposal mission is, to a great extent, accomplished.
That’s why today, it’s conservative or centrist investors who increasingly rely on shareholder proposals to push back and reintroduce neutrality. These investors use the process to challenge politicized spending, request transparency on ideological donations, and advocate for a “get-back-to-business” approach. Even while such proposals rarely win a majority of the votes—often because the largest institutional investors, proxy advisers, and managerial overlords are themselves conflicted—they still generate debate, disclosure, and pressure that can lead to meaningful change.
Without that mechanism, the true owners would lose one of their few legitimate, regulated means to confront politicization inside corporations. The result would be a one-way ratchet toward ideological capture.
Transparency Is the Best Antidote
Shareholder proposals, even unsuccessful ones, serve as catalysts for transparency and accountability. They invite publicity, regulatory attention, and sometimes litigation when management resists scrutiny. This dynamic pressure—messy though it may be—is healthy. It prevents executives from treating corporate assets as personal political tools.
By contrast, ending shareholder proposals would create a vacuum. It would in many of the most important cases consolidate power in the hands of biased management, asset managers, and proxy advisers. If anything, this would amplify the very problem Chair Atkins wants to solve.
There is a better path. If the SEC truly wants to depoliticize governance, it could establish a safe harbor for companies that demonstrate genuine ideological neutrality. Corporations could, for example, earn exemptions from certain proposals by showing that their charitable giving, internal policies, and political expenditures adhere to neutrality standards. Such a system would incentivize depoliticization rather than suppress democratic engagement.
Lessons from Fiduciary Duty
There’s an instructive analogy in corporate law. Limiting the right to bring derivative suits to a few massive institutional investors likely effectively neuters enforcement of fiduciary duties. In practice, restricting remedies to an elite few is little different from abolishing the duties themselves. Likewise, abolishing precatory shareholder proposals would leave only the largest players—those already aligned with the prevailing corporate ideology one sees at the World Economic Forum—in control. Ordinary investors would lose a voice in how their capital is used.
Democracy, Not Silence
Corporate democracy is supposed to be noisy. It’s supposed to allow disagreement, dissent, and debate about how companies conduct business in a divided society. Silencing shareholder proposals because they are political is like silencing voters because elections are contentious. The solution to politicization is not less participation—it’s broader and more balanced participation.
If Chair Atkins’s goal is to depoliticize corporate America, ending shareholder proposals will not achieve it. It will simply make corporate politics less visible, less accountable, and far harder to correct.
