Update Your Disclosure Playbook
Major investors are increasingly using AI to decide how to vote proxies, and JPMorgan’s industry-first decision to replace its external proxy advisors with an in-house AI tool signals that the trend is accelerating. Coupled with the SEC’s renewed focus on materiality and streamlined disclosure under Regulation S-K, this new environment calls for a new disclosure playbook.
Companies should now draft disclosures with both human and AI readers in mind, delivering concise, decision-useful information that reasonable investors would deem important. They should also monitor developments around shareholder proposals and track how major shareholders vote. As AI-driven analyses increasingly shape first impressions of regulatory filings, past voting patterns could become a less reliable indicator of future votes.
Navigate Regulatory Fragmentation
Amid ESG’s emergence as a cultural and political flashpoint, the U.S. federal government has turned away from efforts to impose ESG-related regulation on public companies. Yet despite the federal pullback and anti-ESG initiatives in red states, some blue states and international jurisdictions continue to forge ahead — complicating business for companies operating across state lines or overseas.
This regulatory fragmentation means that meeting ESG-related requirements in some jurisdictions can invite investigation or litigation risk in others. To navigate it, companies should regularly catalog requirements and enforcement activity everywhere they operate, review ESG-related regulatory exposure, and document the business rationale behind major ESG initiatives. An approach of this type helps protect against compliance risk while keeping stakeholder expectations in focus.
Make Resilience a Core Priority
As extreme weather grows more frequent and physical disruptions grow more severe, climate-related risks are fast becoming material business issues, drawing outsize attention from investors and regulators alike. Investing in physical resilience is now a financial and strategic imperative, and companies must recalibrate their priorities in response.
The key is to embed climate risk management into decision-making at the board and executive levels. Treating resilience not just as a defensive measure, but as a competitive advantage, will position companies to protect their operations, respond faster to disruptions, and capture growth opportunities as capital flows shift.
Enhance Controls for Corporate Statements
Corporate statements continue to draw scrutiny from regulators and private plaintiffs, and risks are rising in three areas: overstating progress on environmental goals (greenwashing), withholding useful sustainability metrics (greenhushing), and making AI-related claims that cannot be substantiated (AI-washing). Companies need a standard controls process for each area — one that treats these statements with the same discipline used for financial disclosures.
Start by tracking every public statement across the company, and delegate responsibility for each statement to an internal owner. Require owners to provide robust supporting evidence, and create a process for legal departments to clear high-profile content and establish rules of thumb for day-to-day corporate communications. The outcome should be a single, repeatable process to ensure that statements are clear, consistent, and complete.
Balance Short-Term Pressures with Long-Term Strategy
Corporate boards face numerous near-term pressures: geopolitical tensions and supply-chain disruptions; climate change and technological revolutions; tariff uncertainty, cyberthreats, regulatory upheaval, reputational crises, and more. Yet as boards work to navigate the pressures of today, they must be careful not to lose sight of their long-term strategy.
Balancing the two means thinking in both quarters and decades, and showing that the company is positioned to succeed on both timelines. Map all of the company’s stakeholders and how their needs and expectations could evolve over time. Listen closely to their views. Communicate clearly about how the company is executing on pressing business imperatives while preparing to adapt as conditions change.
