In this week’s edition of Economy and Society:
- SEC makes shareholder proposal no-action pause permanent
- US warns EU it will act over corporate sustainability rules
- Report finds major banks have exited climate coalitions
In Washington, D.C.
SEC makes shareholder proposal no-action pause permanent
What’s the story?
The Securities and Exchange Commission's (SEC) Division of Corporation Finance announced on Aug. 14, 2026, that it will permanently stop responding to no-action requests under Rule 14a-8. The rule governs when shareholders may place proposals on a company's proxy ballot and when companies may exclude them.
No-action letters were nonbinding responses in which SEC staff indicated whether it would object if a company omitted a shareholder proposal from its ballot. The change makes permanent a pause the division first announced Nov. 17, 2025, which had applied only to the 2025-26 proxy season (Oct. 1, 2025-Sept. 30, 2026).
The new policy also goes further than the temporary one. The division will now decline all no-action requests, including exclusion requests under Rule 14a-8(i)(1), a narrow category it had continued to review during the pause. It will also stop sending no-objection letters in response to companies' Rule 14a-8(j) exclusion notices.
The division said it made the change "in order to focus Division resources on the review of Securities Act and Exchange Act filings, including those reviews that are statutorily required, for the protection of investors and facilitation of capital formation."
Companies must still notify the SEC when excluding a proposal, using the agency's online Shareholder Proposal Form.
Why does it matter?
The permanent change ends the SEC's informal referee role in shareholder proposal disputes, many of which involve environmental, social, and governance (ESG) topics like emissions or workforce diversity. Without that guidance, companies and shareholder proponents will lean more on negotiation, existing SEC guidance, and litigation to resolve disagreements.
In July 2026, SEC Chairman Paul Atkins said that "Nearly eight months later, it is clear that neither of these dire predictions materialized" — referring to fears that companies would broadly exclude proposals or that litigation would spike. A count by Freshfields found that 66% of known shareholder proposals were placed on proxies as of June 15, 2026, up from 59% a year earlier, supporting Atkins' assessment.
The Interfaith Center on Corporate Responsibility, an investor coalition focused on corporate social responsibility that opposes the SEC's decision, criticized the change. The group's senior policy advisor, Tim Smith, said, "Instead of having the SEC operate as an informal referee, now investors will be forced to consider other options if a company decides to unilaterally omit a resolution with inadequate arguments."
What’s the background?
The Division of Corporation Finance announced the suspension in November 2025, citing staff resource constraints and the guidance already available from previous proxy seasons. The SEC said the policy would apply only to the 2025-26 proxy season while it evaluated the process.
A mid-season analysis by Glass Lewis, a proxy advisory firm, found that companies were excluding significantly fewer shareholder proposals in 2026 despite the SEC's reduced role in the process.
On March 19, 2026, the Interfaith Center on Corporate Responsibility and As You Sow, a shareholder advocacy nonprofit, sued the SEC in the U.S. District Court for the District of Columbia. The groups said the agency changed how Rule 14a-8 operates without following the Administrative Procedure Act's rulemaking requirements. The lawsuit remains pending.
In the states
Last week, Ballotpedia published its 2026 report on enacted ESG legislation, examining state legislative activity and trends in ESG policy through 2026. The report includes enacted legislation, policy approaches, and differences among states based on trifecta status.
Click here to read last week's edition of Economy and Society. You can also click here to see Ballotpedia's analysis of enacted ESG legislation from 2020 through 2026.
Around the world
US warns EU it will act over corporate sustainability rules
What’s the story?
The Trump administration sent a letter to the European Union (EU) in August 2026 saying that it "will take any actions necessary to address unreasonable burdens on US commerce" unless the EU further scales back two corporate sustainability laws. The letter identifies the Corporate Sustainability Reporting Directive (CSRD), which requires companies to disclose sustainability-related information, and the Corporate Sustainability Due Diligence Directive (CSDDD), which requires companies to address environmental and human rights risks across their operations and supply chains.
In the letter, the U.S. government cites the U.S.-EU Framework Agreement on Trade, signed in August 2025, and states that under that agreement, the EU committed to "undertake efforts to ensure" that CSDDD and CSRD "do not pose undue restrictions on transatlantic trade."
On Aug. 14, 2026, U.S. Ambassador to the EU Andrew Puzder said in an X post that "Now it's time for the EU to deliver" on the EU's trade commitments.
The Trump administration said in the letter that the EU had made some positive reforms but that those changes "failed to fully address U.S. concerns." The administration made the following requests:
- Limiting CSDDD's application to U.S. companies' EU subsidiaries and business partners;
- Barring penalties calculated using revenue earned outside Europe;
- Restricting private lawsuits to cases where a regulator has first found a violation;
- Designating the U.S. as a low-risk jurisdiction eligible for presumed compliance.
The administration also objected to the EU's double materiality standard, which requires companies to report both financial risks and their own effects on people and the environment, saying it exceeds the financial-materiality approach used in U.S. law.
Why does it matter?
The dispute revives trade tension between Washington and Brussels over how far EU sustainability rules can reach beyond its borders. A European Commission (EC) representative said the EC had made considerable efforts "to cooperate with the US to increase trade where possible," but added, "We have been very clear and consistent on the fact that neither our rules framework nor our regulatory autonomy are up for negotiation."
The outcome could affect compliance costs for U.S. companies operating in Europe and shape how much standardized ESG data remains available to investors comparing companies across markets. It also raises the broader question of whether sustainability regulation becomes a recurring flashpoint in U.S.-EU trade relations, alongside existing U.S. criticism of the EU's Carbon Border Adjustment Mechanism.
What’s the background?
The EU began narrowing both directives through its Omnibus I simplification initiative in February 2025, when the EC proposed amendments to "cut red tape and simplify EU rules." The European Parliament voted 428-218 to approve those amendments in December 2025.
Separately, the Commission revised the European Sustainability Reporting Standards (ESRS), which establish the specific disclosure requirements for companies covered by the CSRD. The Commission finalized the standards on July 3, 2026, cutting CSRD's mandatory reporting data points by more than 60%. The Omnibus changes also raised the CSRD threshold to €450 million in revenue and 1,000 employees, reducing the number of companies subject to the directive by 90%.
The changes also raised the CSDDD's employee threshold from 1,000 to 5,000 workers and its revenue threshold to €1.5 billion (about $1.75 billion). Together these changes cut the number of non-EU companies expected to fall within CSRD's scope from roughly 10,000 to about 1,200.
In the spotlight
Report finds major banks have exited climate coalitions
What’s the story?
The Committee to Unleash Prosperity, a free-market advocacy group, released a report Aug. 12, 2026, finding that none of the largest U.S. banks or asset managers it examined remained members of the Net Zero Banking Alliance (NZBA), the Net Zero Asset Managers Initiative (NZAM), or Climate Action 100+ as of October 2025. The report, which the group terms Clexit, was authored by Stephen Moore, Bowyer Research CEO Jerry Bowyer, and Heritage Foundation Visiting Fellow Stephen Soukup. The authors found that the firms' participation in net-zero coalitions fell nearly 90% over four years.
The NZBA had 140 member banks representing $75.5 trillion in combined assets as of November 2024. All six major U.S. banks — JPMorgan Chase, Bank of America, Goldman Sachs, Citigroup, Morgan Stanley, and Wells Fargo — withdrew, and the alliance ended operations as a membership organization in October 2025.
NZAM, which had more than 300 members managing nearly $60 trillion, suspended operations in January 2025 after BlackRock left. The initiative relaunched in February 2026 with more than 250 signatories and a revised commitment that no longer required members to align their portfolios with a net-zero deadline.
The report found some firms retain other climate-related affiliations. It identified Morgan Stanley, Bank of America, Citigroup, and PIMCO as maintaining their ties to Ceres, a non-profit focused on shareholder climate activism, and the Partnership for Carbon Accounting Financials (PCAF), which supports aligning lending and investment portfolios with the Paris Agreement.
Why does it matter?
The report's authors describe the withdrawals as incomplete since many firms retain internal emissions targets and reporting practices resembling those the coalitions promoted. Report co-author Jerry Bowyer said, "You can take the bank out of the climate group, but it's a little tougher to take the climate group out of the bank."
Bowyer attributed the retreat partly to political pressure, including a 2022 antitrust investigation by 19 state attorneys general into six banks' NZBA membership. He also pointed to rising electricity demand from artificial intelligence and data centers, which he said has sustained demand for fossil fuel generation. He said, "The politics got them into these groups. Physics and economics got them out."