In this week’s edition of Economy and Society:
- President Trump EO expands oversight of proxy advisors
- EU parliament passes scaled back climate reporting
- California releases draft climate regulations
- Apple ESG leader to retire, will not be replaced
Programming note: Economy & Society is off the next two weeks. We’ll be back on Jan. 7, 2026.
In Washington, D.C., and around the world
President Trump expands oversight of proxy advisors
What’s the story?
Last week, President Donald Trump (R) issued an executive order increasing federal scrutiny of the two largest proxy advisory services, Glass Lewis and Institutional Shareholder Services (ISS). The executive order, “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors”, directs the Chairman of the Securities and Exchange Commission to expand oversight of and review regulation concerning the two firms.
Why does it matter?
The order directs the SEC to actively revisit how proxy advisors are regulated. It encourages the agency to revisit and potentially rescind all rules, regulations, and other guidance for proxy advisors that are inconsistent with the order, “especially to the extent that they implicate ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ policies.”
It also directs the SEC to:
- Apply federal securities law anti-fraud provisions to statements in proxy advisors’ voting recommendations
- Examine whether an investment advisor consulting a proxy advisor on non-pecuniary factors violates the investment advisors’ fiduciary duty,
- Investigate whether investment advisors coordinate their voting decisions through proxy advisors,
- Consider requiring additional disclosures for proxy advisers related to topics such as their methodology for recommendations, and
- Consider whether proxy advisors qualify as Registered Investment Advisers under the Investment Advisers Act of 1940.
The order signals potential regulatory revisions that could constrain these firms’ influence over shareholder voting recommendations. Reducing the firms’ influence could shift more control toward company leadership or large asset managers.
Under the Administrative Procedures Act, the SEC must initiate separate rulemaking or formal guidance processes for any significant guidance or regulatory changes. However, with 2026 annual shareholder meetings set to begin in January, the order has immediate implications for corporate governance and proxy advisors.
What’s the background?
Proxy advisors provide shareholders with “research, voting recommendations, and administrative services related to the proxy voting process.” According to a September 2025 report from the Congressional Research Service, Glass Lewis and Institutional Shareholder Services account for “a combined market share of more than 90%” of the proxy advisory industry.
In July 2025, a decision from the U.S. Court of Appeals for the District of Columbia limited the SEC’s ability to regulate proxy advisors. The ruling held that “firms such as Institutional Shareholder Services (ISS) and Glass Lewis [do] not constitute a ‘solicitation’ under the Securities Exchange Act of 1934,” which overturned a 2020 SEC rule that applied the Exchange Act to proxy advisors.
Republican House members have also scrutinized proxy advisory firms this year. In May 2025, the House Financial Services Subcommittee on Capital Markets held a hearing examining how proxy advisors influence shareholder voting and whether additional legislative oversight is needed.
The EU parliament agrees scale back climate reporting
What’s the story?
On Dec. 16, members of the European Parliament voted 428-218 to approve legislation that scales back the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). The legislation must still clear the European Council, but, according to Responsible Investor, the vote meant that the package of amendments to climate reporting requirements “effectively cleared its final hurdle after months of heated debate and political wrangling.”
Why does it matter?
According to an analysis by ESG Dive, the revised directives will exempt 90% of the companies the CSRD originally covered and 70% of those the CSDDD covered. The package also significantly changes compliance requirements for large companies that the directives still cover.
Among other changes, the legislation:
- Raises employee and revenue thresholds before entities must comply with reporting requirements,
- Removes certain due diligence obligations for companies to identify and mitigate climate-related risks,
- Delays implementation of reporting for companies in certain sectors, and makes some sector-specific reporting voluntary,
- Limits civil liability related to compliance with the directives, and
- Removes a legally binding obligation for certain companies to adopt and demonstrate implementation of climate transition plans.
What’s the background?
In February, the European Commission introduced proposed amendments to the directives. They announced a “vision to make the EU’s economy more prosperous and competitive, building on the recommendations of the Draghi report,” referencing a 2024 report on European competitiveness that former European Central Bank President Mario Dragh wrote, and said they intended to “cut red tape and simplify EU rules for citizens and business.” The Commission also cited Article 114 of the Treaty on the Functioning of the European Union as justification for the changes. The article creates legislative authority to harmonize rules across member states to make the bloc’s internal market work smoothly.
The EU Parliament and Council established the CSRD in 2022 and the CSDDD in 2024. The CSRD went into effect in 2023, with phased application to additional companies from 2024 onward, while the CSDDD entered into force in 2024, applying initially to large companies and non-EU parent companies with revenue greater than €450 million from EU operations.
Trade representatives from the United States have explicitly explored changes to CSDDD as part of ongoing U.S.-EU trade negotiations. In August, in a joint statement between the U.S. and EU regarding a trade framework, negotiators announced that:
In the context of CSDDD, [the EU commits to] undertaking efforts to reduce administrative burden on businesses, including small- and medium-sized enterprises, and to propose changes to the requirement for a harmonized civil liability regime for due diligence failures and to climate-transition-related obligations… [and to] address U.S. concerns regarding the imposition of CSDDD requirements on companies of non-EU countries with relevant high-quality regulations.
Critics of the revised directives say that the changes will undermine corporate accountability structures and create investor and legal uncertainty. Critics, including several EU investor membership bodies, say that eliminating reporting and due diligence requirements will jeopardize access to financing for companies with an ability to demonstrate their sustainability—especially small and medium sized ones. They argue that removing compliance requirements for most businesses and continued regulatory uncertainty will undermine the conditions for effective investment across the EU.
In the states
California releases draft climate regulations
What’s the story?
Last week, the California Air Resources Board (CARB) published draft text of the regulatory implementation for two laws, SB 253 and SB 261 that require climate-related reporting for certain companies. The proposed regulations are scheduled for a 45-day comment period, with final approval expected in February. The proposed implementation rules include details related to initial deadlines, to reporting schedules, fee assessments, and covered entities and exemptions.
Why does it matter?
The draft regulations propose that companies must meet the definition of a covered or reporting entity for two consecutive years before they are required to comply with SB 253 and SB 261. This means that if a company’s revenue falls below the revenue threshold in any of the preceding two fiscal years, they are not required to report or pay fees for the upcoming reporting cycle.
The laws require covered entities to pay a share of the program’s administrative costs as an annual fee. The draft regulations propose that all covered entities will pay the same amount regardless of revenue, emissions, or other variables. They provide that each covered entity will be responsible for a flat fee calculated by dividing program costs by the number of entities required to pay. The draft also indicated that CARB will recalculate the fee on an annual basis and will charge the fee on Sept. 10 of each year. Entities will have 60 days to pay before incurring penalties.
Under the proposed rules, Aug. 10, 2026 will be the first reporting deadline for Scopes 1 and 2 emissions, direct emissions from sources a company owns or controls. Companies that were not collecting this data before a Dec. 5, 2024 enforcement notice from CARB do not need to report for the initial cycle.
The regulations also provide for permanent exemptions from the reporting requirements, such as for federal, state, and local government entities, certain non-profits and charitable organizations, and businesses “whose only activity within California consists of wholesale electricity transactions.”
Finally, the draft regulations clarify how certain terms, such as “doing business in California,” “parent,” and “subsidiary” are defined. Namely, they define these terms by referencing definitions found in the California Revenue and Taxation Code and the California Code of Regulations.
What’s the background?
Gov. Gavin Newsom (D) signed both bills into law in October 2023. The laws, which require greenhouse gas emissions and climate-risk assessment, respectively, are scheduled to go into effect in 2026, although on Nov. 18 the U.S. Ninth Circuit Court of Appeals issued a temporary injunction of SB 261 while an appeal was ongoing.
SB 251 requires entities with more than $1 billion in revenue that are based in the U.S, and that do business in California to begin reporting certain greenhouse gas emissions in 2026, and expands these requirements in 2027. SB 261 requires U.S.-based companies with more than $500 million in revenue doing business in California to “make publicly available a report on climate-related financial risks and measures adopted to reduce and adapt to those risks” on a biennial basis beginning in 2026. In October, California regulators identified more than 4,000 companies that may fall under these laws.
Business groups—including the U.S. Chamber of Commerce, the California Chamber of Commerce, the American Farm Bureau Federation, and several regional federations—challenged both statutes. A U.S. district court first denied their request for a preliminary injunction, allowing both laws to move forward. After the Ninth Circuit also declined to halt the laws, the groups submitted an emergency application to the U.S. Supreme Court requesting a stay of both SB 253 and SB 261. The Ninth Circuit ultimately paused only SB 261 while leaving SB 253 in effect as the appeal proceeded.
In the spotlight
Apple ESG leader to retire, will not be replaced
What’s the story?
Apple announced that Lisa Jackson, its vice president of Environment, Policy and Social Initiatives, will retire next month, after more than a decade with the company. The company also announced that Jackson will not be directly replaced, and her duties will be divided among current and incoming executives.
Read more:
According to ESG Dive:
[Jackson] currently oversees [Apple’s] sustainability efforts, which include transitioning to renewable energy sources, utilizing materials with a lower carbon footprint and backing innovation in climate tech, per the tech company’s website. She also leads several of Apple’s diversity, equity and inclusion-focused initiatives, including its $100 million racial equity and justice program that supports educational reforms and minority-owned businesses.
…
Apple has tapped Meta’s former chief legal officer Jennifer Newstead to take on the role of general counsel starting March 1, 2026. Newstead will also take over Jackson’s policy work while Apple’s environmental and social initiatives will now be overseen by the company’s chief operating officer, Sabih Khan, according to the company’s update