Canadian companies are fielding fewer proxy proposals at their annual meetings this year, as the anti-ESG movement casts a chill on investor activism beyond the U.S., shareholders and their advisors say.

Every year, shareholders of public companies get to propose and vote on changes they want those companies to make during a period known as proxy season. For years, they have pressed for environmental, social and governance (ESG) changes, with a growing focus on environmental and social issues. 

But a political backlash to ESG in the U.S. has curbed shareholder activism, leading to a subdued proxy season so far. “Given the anti-ESG movement and DEI backlash in the U.S., what I’m seeing is lower support for a lot of proposals,” said Courteney Keatinge, senior director of ESG research at proxy advisory firm Glass Lewis. 

A recent report from Glass Lewis competitor Institutional Shareholder Services (ISS) found a steep drop in the number of proposals filed. Companies listed on the Russell 3000 index in the U.S. received 782 resolutions this proxy season, down from 906 in 2024. At the same time, there was a surge in the number of resolutions that were filed but that didn’t make it to a vote, with nearly 25 per cent of the 782 proposals not clearing what’s become a higher bar. ISS and Glass Lewis did not have Canada-specific data for proxy season to date.

ISS cited “increased political pushback” as one reason for the decline in proposals in the U.S., particularly in regards to environmental or social issues. President Donald Trump has stoked growing backlash against ESG principles and the businesses and investors that have adopted them, prompting some of the world’s largest companies and investment firms—including Walmart, Meta and BlackRock—to cancel diversity and climate initiatives. 

It’s not just American companies and investors affected by the changes. Sarah Couturier-Tanoh, director of the Shareholder Association for Research and Education (SHARE)—an ESG-focused investment group in Canada—said the organization’s proposals filed on workers’ rights at Tesla and Amazon this year were omitted because of new rules at the U.S. Securities and Exchange Commission (SEC). In February, the regulator expanded companies’ abilities to block proposals that deal with environmental and social issues, and those that appear to “micromanage” the company. “It leaves a huge vacuum of accountability,” said Couturier-Tanoh. 

The SEC has also effectively stopped requiring public companies to disclose climate-related information, voting in March to stop suing firms that don’t report their carbon emissions. The new rules have directly quelled shareholder activism, on both sides of the border.

Milla Craig, president and CEO of investor consulting firm Millani, said the changes have left her clients conflicted over how to handle issues like diversity and climate change. Many public Canadian firms have business in the U.S., Craig noted, which could subject them to the regulatory and cultural whims of that country. Their shareholders on both sides of the border are mindful of that, she said. “They’re all being ultra, ultra cautious right now.”

At the same time, Canada has distinct securities regulations that prevent companies here from abandoning ESG principles altogether. Federally incorporated companies in the country, for instance, have to disclose the diversity of their boards of directors and senior management, including the number of women, visible minorities, Indigenous people and people with disabilities. Even with these requirements, Craig said investors aren’t pressing Canadian companies on their ESG practices as hard as they have in the past, particularly on DEI issues. “They’re a little more lenient,” she said, “because we don’t want to put businesses into some sort of jeopardy of litigation or things of that nature.” 

Craig added that drawing attention to diversity and climate initiatives could create “headline risk” for companies—that’s why they’re avoiding the topics in public statements and records. 

Indeed, mentions of ESG and DEI-related terms in proxy material filed at both U.S. and Canada firms plummeted this year. Data from market intelligence platform AlphaSense shows a 65.9 per cent year-over-year decline in documents that reference DEI and a 30.4 per cent drop in climate change mentions at U.S. firms between March and May. While the drop-off wasn’t as steep in Canada, filings mentioning DEI and climate change fell 23.9 per cent and 15.1 per cent, respectively.

Still, Craig said the relative quiet doesn’t mean investors have lost interest in social and environmental issues that could impact their returns. “What we’re hearing is the investors are not backing off on the integration of ESG,” she said, adding that these conversations are happening behind closed doors. But, she said, “in the absence of communication to that effect, it leaves lots of space for questioning.” 

Proxy season is ongoing, with many companies holding their annual meetings through June. But Couturier-Tanoh said voting results so far offer another indication that investors have maintained a stronger appetite for ESG in Canada than the U.S. 

For instance, climate proposals that SHARE filed at TD Bank, CIBC and BMO—asking banks to disclose their financing for renewable energy relative to non-renewable energy—garnered 38.3 per cent, 37.1 per cent and 32.4 per cent support, respectively. Couturier-Tanoh considers the results a success, given they exceed the typical median support for social and environmental proposals, and that the Canadian proposals outperformed similar ones filed at U.S. banks last year. Another SHARE resolution asking Scotiabank to conduct a racial equity audit received 38 per cent support, the highest voting result at the bank across all proposals in the past 15 years. 

Both Keatinge and Craig said this proxy season may be an anomaly. “It’s a very dynamic space,” said Keatinge, who’s watching for more potential regulatory changes and expects companies and investors to continue adjusting their approaches to proxy voting this year and next. 

Craig expects there may be a rebound in shareholder proposals next year as the business community becomes more comfortable with new ESG regulations and voting guidelines. “A lot of businesses are trying to understand how can they manage this?” she said, “I think it’s going to take a little bit of time.”