In this week’s edition of Economy and Society:
- SEC chairman suggests no-action pause could continue
- ESG legislation update
- Starbucks reconsiders 2030 climate target
- Microsoft reports 25% emissions increase as AI expands
- San Diego pension report finds managers improved ESG practices
- Study shows wealth advisers slow to adopt ESG branding
In Washington, D.C.
SEC chairman suggests no-action pause could continue
What’s the story?
Securities and Exchange Commission (SEC) Chairman Paul Atkins said the agency may continue suspending most no-action letters for shareholder proposal disputes beyond the current proxy season. Speaking on July 9 at the Society for Corporate Governance National Conference in Nashville, Tennessee, Atkins said the policy change caused fewer disruptions than many observers had predicted.
Rule 14a-8 is the SEC rule governing when eligible shareholders may place proposals on a company's proxy ballot and when companies may exclude them. Companies have traditionally requested no-action letters asking whether the SEC would object if the company omitted a shareholder proposal from the ballot. The letters indicate the SEC's view on whether a proposal may be excluded, but they are not legally binding.
The SEC's Division of Corporation Finance stopped responding to most no-action requests in November 2025 for the current proxy season, which runs from Oct. 1, 2025, through Sept. 30, 2026. Companies have instead had to determine whether proposals qualify for exclusion without receiving an SEC response.
Atkins said, "Nearly eight months later, it is clear that neither of these dire predictions materialized," referring to concerns that companies would broadly exclude shareholder proposals or that litigation would increase dramatically. He added that it would be difficult to direct SEC staff "to return to a tedious, and evidently ineffectual, task" when other agency work remains unfinished.
Why does it matter?
Atkins' comments are the clearest indication that the SEC may permanently step back from providing informal guidance on whether companies can exclude shareholder proposals. Instead, companies and shareholders would continue to rely on negotiations, previous SEC guidance, and litigation when they disagree over whether a proposal belongs on a proxy ballot.
Many shareholder proposals filed under Rule 14a–8 involve environmental, social, and governance (ESG) issues. Continuing the policy would allow companies to keep excluding some proposals without first seeking a no-action letter from the SEC.
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.
On March 19, 2026, the Interfaith Center on Corporate Responsibility, an investor coalition focused on corporate social 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 as Atkins indicates the SEC may continue the policy beyond the current proxy season.
In the states
ESG legislation update
No states took action on ESG-related bills since July 7, 2026. Click here to see the ESG legislation tracker.
On Wall Street and in the private sector
Starbucks reconsiders 2030 climate target
What’s the story?
Starbucks is reconsidering its pledge to cut greenhouse gas emissions 50% from 2019 levels by 2030 after its supply-chain emissions continued to rise. The company said in its 2025 Impact Report that it is actively reassessing the target while evaluating regulatory changes, updated standards, and other developments.
Starbucks reduced its Scope 1 (direct) and Scope 2 (indirect) emissions by 17% between 2019 and 2025. However, Scope 3 emissions, which come from the company's supply chain, increased 8% during the same period. Scope 3 emissions account for more than 90% of Starbucks' total emissions, contributing to a 7% increase in the company's overall greenhouse gas emissions since 2019. Coffee farming, dairy production, and other purchased goods and services account for most of these supply-chain emissions.
Kelly Goodejohn, the company’s Chief Sustainability and Social Impact Officer, said, “We intend to continue to take action designed to manage our greenhouse gas emissions across our operations and supply chains, and to transparently report on our progress.”
Why does it matter?
Starbucks' report shows the difficulty companies can face when most of their emissions occur outside of their direct operations. The company can directly address energy use in stores and facilities, but reducing Scope 3 emissions requires changes involving farmers, suppliers, transportation providers, and other businesses throughout its supply chain.
The reassessment also illustrates how some companies are reviewing climate commitments adopted earlier in the decade as reporting standards evolve and implementation proves more difficult than anticipated. Starbucks' decision stops short of abandoning its target, but it signals that at least some companies are reconsidering how they measure or pursue long-term emissions goals.
Microsoft reports 25% emissions increase as AI expands
What’s the story?
Microsoft reported that its greenhouse gas emissions increased 25% in fiscal year 2025, driven largely by the expansion of data centers supporting artificial intelligence (AI). In its 2026 Environmental Sustainability Report, the company said AI is increasing demand for energy, water, land, and construction materials.
Microsoft identified two primary reasons for the increase: expansion of its data center infrastructure and its decision to stop using certain renewable energy certificates — credits that allow companies to claim electricity from renewable sources even if they do not purchase that electricity directly. The company said it is prioritizing investments that add new carbon-free electricity to power grids rather than relying on certificates tied to existing generation. The change increased Microsoft's reported emissions in the near term.
Scope 3 emissions remained the largest part of its footprint at 85.8% and increased about 12%. Scope 2 emissions rose from less than 2% of the company's footprint to 13%.
Microsoft expanded its renewable energy portfolio to 40 gigawatts in fiscal year 2025, up from 34 gigawatts a year earlier. The company also reaffirmed its goals of becoming carbon negative, water positive, and zero waste by 2030. Microsoft said in the report, “We do not see these dynamics as a reason to step back. We see them as a mandate to lead differently.”
Why does it matter?
Microsoft's results illustrate the tension between expanding AI infrastructure and meeting corporate climate commitments. Data centers require large quantities of electricity and materials, while manufacturing servers and other equipment produces additional supply-chain emissions.
The change in Microsoft's clean energy strategy also affects how the company reports progress. Moving away from certificates increased the company's reported emissions, but Microsoft said investing in new carbon-free generation would produce more durable reductions than relying on certificates alone. The report therefore reflects both the expansion of AI infrastructure and a change in Microsoft's clean energy accounting.
San Diego pension report finds managers improved ESG practices
What’s the story?
The San Diego City Employees' Retirement System (SDCERS) reported that nearly all of its investment managers improved their ESG practices in 2025, according to materials presented at board meetings on July 9 and 10. Investment Officer Demitrios Haldes said, "Nearly all of SDCERS' investment managers have made strides in at least one of the categories in 2025."
SDCERS evaluated managers' ESG performance in four areas:
- Growth of ESG teams
- New engagements with external ESG firms
- Expanded ESG reporting
- Enhanced ESG integration
According to the report, nearly all managers improved in at least one of those areas during the past year. The pension system found little change in workforce diversity metrics, including the gender and racial composition of employees and managers. Haldes said, "At a high level, the aggregate diversity statistics of SDCERS' portfolio did not significantly change over the past year."
Why does it matter?
SDCERS' report provides a snapshot of how one public pension system evaluates the ESG practices of its external investment managers. Rather than measuring investment returns, the review assesses managers' ESG practices, including staffing, reporting, external partnerships, and integration into their investment processes.
The report also suggests SDCERS views ESG implementation and workforce diversity as separate measures, with managers reporting progress on ESG practices while diversity metrics remained largely unchanged.
Study shows wealth advisers slow to adopt ESG branding
What’s the story?
A new analysis from private wealth data provider FINTRX found that relatively few registered investment advisers (RIAs) — firms that provide investment advice and portfolio management to individuals and institutions — in the U.S. explicitly market themselves as ESG investors. FINTRX classified 932 of 12,895 independent RIAs (7.2%) as active ESG investors based on regulatory filings and platform data. By comparison, 26.6% to 34.4% of the 4,602 family offices in FINTRX's global database were classified as active impact investors, depending on where they are located.
FINTRX's report also found geographic differences among RIAs. Vermont had the highest concentration of ESG investors at 20.6%, although the state only had 34 registered RIAs. Among states with larger RIA populations, Colorado ranked first at 12%, while California, home to the nation's largest RIA population, registered 6.3%. Mississippi, North Dakota, and West Virginia had no RIAs classified as ESG investors in the database. FINTRX cautioned that percentages in states with relatively few firms can change substantially with small changes in firm counts.
Why does it matter?
The findings suggest wealth advisers are much less likely than family offices to publicly identify their investment strategies as ESG-focused. FINTRX said that comparison reflects different approaches to sustainable investing: the RIA designation identifies firms that explicitly describe themselves as ESG investors in regulatory filings, while the family office designation identifies firms using impact investing strategies.
The report also highlights geographic differences in ESG adoption. While advisers identifying themselves as ESG investors remained relatively uncommon nationwide, they are more concentrated in some states than others, and family offices outside the United States are more likely than their U.S. counterparts to incorporate impact investing into their strategies.
