Just a few weeks into the new year, this proxy season is already proving to be the most unpredictable since 2021. Much like four years ago, the combination of a new administration, shifting regulations and legal uncertainties, and a major cultural shift—this time away from DEI and ESG rather than toward them—has created an atmosphere of heightened ambiguity.
It may take several months before we see exactly how companies will adjust their ESG and DEI policies and programs, and how investors will respond. For now, however, let’s focus on what is more certain and share some early insights regarding proxy statements and board diversity disclosures.
One of the biggest changes so far stems from a December ruling by a U.S. appeals court striking down Nasdaq’s board diversity rule. In addition to setting specific diversity thresholds, the rule had required Nasdaq-listed companies to disclose board members’ intersecting gender and racial/ethnic identities, and it encouraged reporting on other diversity factors, such as veteran status and LGBTQ+ identification.
Although most non-Nasdaq firms did not adopt the Nasdaq diversity grid, intersectional gender and race/ethnicity disclosure had become the baseline for many large corporations—in 2024, 72.6% of NYSE-listed S&P 500 companies included at least that level of detail.
So far, 98 Russell 3000 companies have published their proxy statements for 2025 shareholder meetings. The average board transparency score (out of 100) for these companies, which measures the level of detail companies disclose for board demographics has slipped to 43 from 46.5 the prior year. For reference, the average for the full Russell 3000 is 47 and for the S&P 500 is 55.5, up from 24 and 39 in 2021 .
Three companies actually increased their score in 2025 (all NYSE companies), but 18 companies provided less granularity this year, 14 of them Nasdaq-listed companies. Four Nasdaq-listed companies went from reporting intersectional diversity using the Nasdaq grid to not reporting any information about the gender and race/ethnicity of their directors.
We expect many Nasdaq-listed companies, especially those outside the S&P 500/Russell 1000, will simply stop disclosing board diversity altogether. However, we see very little changing when it comes to larger companies.
The other major driver of increased transparency was large proxy advisors and asset managers pushing for more board diversity and/or disclosure of characteristics. While language has changed over the years, we still expect larger companies to continue disclosing and showing progress towards diversity:
State Street (2025 guidelines not available yet)
2024 Proxy Voting Policy included both disclosure and thresholds for diversity:
- If a company in the Russell 1000 or FTSE 350 does not disclose the gender, racial and ethnic composition of its board, we may vote against the Chair of the nominating committee.
- We expect boards of all listed companies to have at least one female board member. If a company does not meet the applicable expectation for three consecutive years, State Street Global Advisors may vote against all incumbent members of the nominating committee or those persons deemed responsible for the nomination process. We may withhold support from the chair of the nominating committee when a company in the S&P 500 or FTSE 100 does not have at least one director from an underrepresented racial/ethnic community on its board.
BlackRock
While not explicitly requiring demographic disclosure, 2025 Proxy Voting Guidelines discuss diversity more broadly
- Many S&P 500 companies report in their disclosures benefitting from their current levels of diversity. Over the past decade, we observe companies increasingly nominating directors from different backgrounds, noting that this helps their boards more effectively understand the company’s customers, employees, and communities. At present, more than 98% of S&P 500 firms have diverse representation . To the extent an S&P 500 company board is an outlier and does not have a mix of professional and personal characteristics (gender; race/ethnicity; disability; veteran status; LGBTQ+; and national, Indigenous, religious, or cultural identity) that is comparable to market norms, we may vote on case-by-case basis against members of the nominating/governance committee.
ISS
Their 2025 Proxy Voting Guidelines discusses diversity but implies disclosure
- Generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) at companies where there are no women on the company’s board. For companies in the Russell 3000 or S&P 1500 indices, generally vote against or withhold from the chair of the nominating committee (or other directors on a case-by-case basis) where the board has no apparent racially or ethnically diverse members.
Glass Lewis
They are the most direct in their 2025 Proxy Voting Guidelines when it comes to disclosure and thresholds of diversity:
- Because company disclosure is critical when measuring the mix of diverse attributes and skills of directors, Glass Lewis assesses the quality of such disclosure in companies’ proxy statements. Accordingly, we reflect how a company’s proxy statement presents: (i) the board’s current percentage of racial/ethnic diversity; (ii) whether the board’s definition of diversity explicitly includes gender and/or race/ethnicity; (iii) whether the board has adopted a policy requiring women and minorities to be included in the initial pool of candidates when selecting new director nominees (aka “Rooney Rule”); and (iv) board skills disclosure.
- We consider the nominating and governance committee to be responsible for ensuring sufficient board diversity, or for publicly communicating its rationale or a plan for increasing diversity. As such, we will generally recommend voting against the chair of the nominating committee of a board that is not at least 30 percent gender diverse, or all members of the nominating committee of a board with no gender diverse directors, at companies within the Russell 3000 index. We will generally recommend against the chair of the nominating committee of a board with fewer than one director from an underrepresented community on the board at companies within the Russell 1000 index.
We anticipate these guidelines, along with company policies and programs (e.g., the Rooney Rule), will be revisited in response to recent executive actions and the evolving political and regulatory environment. However, this season we still expect larger companies to remain accountable for reporting granular data and demonstrating progress on board diversity.
What we’re reading:
- How Trump’s Assault on DEI Will Ripple Across Corporate America (Wall Street Journal) and Companies Parse What Makes a DEI Program Illegal Under Trump (Bloomberg Law) and Trump’s Attack on ‘Illegal’ DEI Disorients Corporate America (Bloomberg) and Trump’s DEI cuts force Davos elite to find new words for diversity (Reuters)
- Employee Turnover: A Key Metric for Human Capital Management (ISS)
- Workers are coffee badging to get around return-to-office mandates. What is it? (USA Today) and Many remote workers say they’d be likely to leave their job if they could no longer work from home (Pew)
- Costco successfully defends its diversity policies as other US companies scale theirs back (AP) and JPMorgan, Goldman CEOs Resist Calls to Roll Back DEI Programs (Bloomberg Law)