Governance & Sustainability Roundup – September 9, 2026

Welcome to our Governance & Sustainability Roundup — Our regular briefing that gives a quick overview of what has recently happened in the world of governance and sustainability that may be of interest to your company, your executive team, or your board. This is a fast-evolving space and we hope to share brief highlights with you on a regular basis.

V&E continues to monitor these developments and is happy to discuss any of these updates in more detail, so please reach out with any questions.

Key Developments You Should Know

• SEC Signals Executive Compensation Reform, Rule 14a-8 Rescission, and Proxy Solicitation Rule Proposals are Coming Soon
• CARB Releases New Information on SB 253
• SEC Issues New CFIs Regarding 13G Eligibility
• Deloitte Agrees to over $20 Million Settlement with DOJ over DEI Policies
• Texas Stock Exchange Proposes Proportional Voting Framework
• Republican State Attorneys General Warn Big Four Accounting Firms over Climate-Related Policies

SEC Signals Executive Compensation Reform, Rule 14a-8 Rescission, and Proxy Solicitation Rule Proposals are Coming Soon

The SEC was busy this summer. Prior to the Labor Day holiday, it submitted three highly anticipated proposals to the White House’s Office of Information and Regulatory Affairs (OIRA): Executive Compensation Disclosure Reform, Shareholder Proposal Modernization (titled Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4), and Amendments to Certain Proxy Rules (titled Proxy Solicitation Modernization).

As noted in the Spring 2026 Reg Flex Agenda, the Executive Compensation Disclosure Reform proposal is expected to amend Item 402 of Regulation S-K to “rationalize executive compensation disclosure requirements.” This development follows a June 2025 roundtable and public comment process through which the SEC solicited input on potential changes to, among other things, reduce unnecessary complexity, enhance cost-effectiveness for registrants, and provide material information to investors.

While the 2026 Reg Flex Agenda more vaguely noted that the SEC was considering recommending amendments to “modernize the requirements of Exchange Act Rule 14a-8 to reduce compliance burdens for registrants and account for developments since the rule was last amended,” the title of the OIRA posting (“Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4”) indicates that the SEC is moving toward dismantling the federal framework that has governed the ability of shareholders to include their proposals in companies’ proxy statements for decades. Assuming that a rescission proposal is ultimately adopted, companies can expect their governing documents and applicable state law to play a much larger role in the future shareholder proposal landscape. The transition may be bumpy and inconsistent across jurisdictions, as this area of law remains unsettled in many states and the approaches adopted could differ significantly from state to state. For example, Texas recently adopted Texas Business Organizations Code Section 21.373, which allows certain public companies with a nexus to Texas to limit shareholder proposals to those meeting strict criteria. In the meantime, remember that the SEC’s Division of Corporation Finance issued a statement on August 14, 2026, announcing that it will remove itself entirely from the Rule 14a-8 process and will not respond to Rule 14a-8 no-action requests of any kind.

As to “Proxy Solicitation Modernization,” the 2026 Reg Flex Agenda indicates that the SEC will propose “amendments to modernize certain rules regarding the proxy solicitation process, including certain filing and procedural requirements relating to proxy solicitations and shareholder meetings, to reduce costs and compliance burdens.”

OIRA review is required before the SEC can formally publish its proposed rulemaking, and while OIRA has 90 days to complete its review, it often approves SEC proposals much sooner. We could therefore expect the proposals to drop any day now…

CARB Releases New Information on SB 253

On September 1, 2026, the California Air Resources Board (“CARB”) published new guidance to assist reporting entities in preparing and submitting their first Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions reports under SB 253 — California’s Climate Corporate Data Accountability Act. CARB also launched a voluntary intake platform to streamline first-year reporting and fee invoicing.

SB 253 requires U.S.-based entities with more than $1 billion in annual revenue that “do business” in California to publicly disclose their GHG emissions annually. The initial Scope 1 and Scope 2 reporting deadline was deferred to November 10, 2026; Scope 3 reporting remains on track for 2027. SB 253’s companion law, SB 261, remains subject to a Ninth Circuit preliminary injunction.

CARB’s new guidance is consistent with its prior positions and does not impose additional requirements. The key points include:

• First-year enforcement discretion reaffirmed. CARB will accept Scope 1 and Scope 2 reports based on data entities already had or were collecting as of the December 5, 2024 Enforcement Notice. Entities that were not collecting, and were not planning to collect, such data at that time are not expected to submit emissions data for the 2026 cycle, but CARB requests that they submit a statement of non-reporting on company letterhead.
• Flexible reporting formats. Entities may submit an existing annual report that includes Scope 1 and 2 data, existing data reported to other programs or voluntary initiatives, or data using CARB’s draft Scope 1 and 2 template (published October 10, 2025). Use of CARB’s template is voluntary.
• Assurance not required in 2026. Although the law requires limited assurance beginning in 2026, CARB will accept submissions whether or not assurance has been obtained this year, consistent with its enforcement discretion posture.
• Scope 2 emission factors. CARB acknowledged that the EPA has not released eGRID 2024 on its usual timeline and confirmed that entities may use eGRID 2023, the eGRID 2024 dataset published by the Cornerstone Sustainability Data Initiative, or other credible emission factor sources.
• Voluntary intake platform now live. CARB’s new online platform allows reporting entities to provide contact and billing information and, optionally, to submit Scope 1 and 2 reports or statements of non-reporting. Use of the platform is voluntary — entities may alternatively submit by email to [email protected].

As the November 10 deadline approaches, companies should confirm whether they qualify as a “reporting entity” and prepare their submissions accordingly. CARB’s Preliminary List is not a definitive compliance tool and is likely both overinclusive and underinclusive, particularly for companies that have undergone business combinations or restructurings (an important consideration in M&A contexts). Companies already collecting emissions data should finalize their Scope 1 and 2 reports; those that were not collecting data as of December 2024 should prepare a statement of non-reporting. Fee invoices will follow by December 10, with payment due within 60 days. With the November 10 deadline imminent, a court may yet enjoin SB 253 as it has SB 261 and we would not be surprised by that development, but companies should not count on it and should continue preparing their submissions.

SEC Issues New CFIs Regarding 13G Eligibility

The SEC issued new guidance on shareholder engagement in the form of a handful of new corporation finance interpretations (“CFIs”). In doing so, the SEC appears to be seeking to rectify much of the confusion arising from its prior CFI (known as a Compliance and Disclosure Interpretation or “C&DI” at the time) regarding what conduct could be perceived as shareholder activism, and the new CFIs appear aimed at clarifying that more routine and typical shareholder engagement activities should not be viewed as attempts to exercise “influence” over an issuer.

In CFI 103.13, the Staff clarified that both issuer-initiated engagements and responses to issuer requests for understanding voting decisions in past shareholder meetings would be seen by the SEC as less indicative of attempting to assert “influence” control over the issuer. Such discussions, without more, would be unlikely to disqualify a shareholder from reporting on Schedule 13G according to the Staff.

In addition, the Staff clarified in CFI 103.14 that a shareholder discussing its views on a topic, including how such views inform its voting decisions with persons engaged in a proxy solicitation, would not on its own disqualify the shareholder from reporting on Schedule 13G.

Finally, in CFI 103.15, the Staff explained that a shareholder would not be disqualified from reporting on Schedule 13G solely for engaging with an issuer to clarify statements set forth in the issuer’s proxy soliciting materials.

Taken as a whole, the new CFIs provide welcome guidance following the Staff’s 2025 CFI, which noticeably cooled lines of communication between issuers and large asset managers and other institutional investors that historically leveraged their proxy voting power to allegedly influence issuer behavior. The 2025 CFI caused uncertainty regarding whether previously typical engagement conduct between institutional investors and corporate issuers could be characterized as an attempt to assert influence and thereby trigger Schedule 13D reporting obligations, a burdensome designation typically required for traditional shareholder activists. The new CFIs appear designed to restore clarity, signaling that conventional, non-activist engagement — including responding to issuer outreach, discussing voting rationale, and seeking clarification on proxy materials — will not, standing alone, jeopardize a shareholder’s eligibility to report on Schedule 13G, a fear that had significantly stunted conversations over the past 18 months.

Deloitte Agrees to over $20 Million Settlement with DOJ over DEI Policies

The U.S. Department of Justice (“DOJ”) announced a $21.5 million settlement with Deloitte resolving allegations that the firm discriminated against employees and applicants on the basis of race or sex through DEI-related goals embedded in its hiring, promotion, and staffing decisions. The allegations were brought under the False Claims Act as part of the DOJ’s Civil Rights Fraud Initiative, which targets federal contractors that the administration believes have used taxpayer funds to support DEI practices in violation of civil rights laws. Among the specific allegations, the DOJ claimed that Deloitte business units received monthly progress reports tracking advancement toward race- and sex-based workforce composition goals and that partners, principals, and managing directors were evaluated in part on contributions toward those goals. The settlement follows a $30 million DEI-related settlement the DOJ reached with PayPal and comes amid broader federal enforcement activity against companies with DEI programs, including EEOC investigations and lawsuits targeting Nike and the New York Times. This development is a further reminder that federal contractors, and companies that receive federal funds, face meaningful legal exposure from DEI initiatives that are alleged to condition employment decisions on race or sex, even where such programs were previously widely adopted across corporate America and understood to be permissible. The current administration’s enforcement posture in this space shows no signs of abating.

Texas Stock Exchange Proposes Proportional Voting Framework

The Texas Stock Exchange (“TXSE”) filed a proposed rule change with the SEC to amend its proxy voting rules and eliminate broker discretionary voting for companies with a primary listing on the TXSE. Under the proposed rule change, for each proposal at a shareholder meeting, brokers would be required to vote uninstructed shares in the same proportion as the shares voted according to the instructions actually received from other beneficial owners. Brokers would also be required to vote uninstructed shares as present for the purposes of determining quorum for the meeting. TXSE noted that the rule change would also reduce inconsistency in the treatment of uninstructed shares across different types of proposals, such as those that are deemed “routine” and “non-routine” under NYSE Rule 452. In addition, the proposed rule reflects TXSE’s view that matters to be voted on by TXSE-listed companies should be determined by participating beneficial owners, rather than at the discretion of brokers. The proposed rule change could provide certain benefits to companies, including making it easier to attain quorums and potentially lessening the burden to achieve the required approval for certain proposals with higher voting thresholds that take into account all outstanding shares. On September 8, 2026, the SEC instituted proceedings to determine whether to approve TXSE’s proposed rule change, and has requested public comments to help inform the agency’s decision.

Republican State Attorneys General Warn Big Four Accounting Firms over Climate-Related Policies

On August 24, 2026, a coalition of 16 Republican state attorneys general — co-led by Nebraska AG Mike Hilgers along with the AGs of Texas, Alaska, and Florida — sent a 38-page letter to Deloitte, EY, KPMG, and PwC (the “Big Four”) alleging that the firms may have violated their professional duty of auditor independence by supporting climate-related financial disclosure initiatives. The letter was also sent to SEC Chair Paul Atkins and the director of the SEC’s enforcement division.

The letter takes issue with the Big Four’s former membership in the now-disbanded Net-Zero Financial Service Providers Alliance, their involvement with the Task Force on Climate-related Financial Disclosures, and their status as signatories to the 2023 COP28 declaration supporting the International Sustainability Standards Board’s climate-reporting framework as a global baseline. The AGs argue that these commitments — which they contend pushed climate-related disclosures regardless of traditional materiality thresholds — compromised the firms’ objectivity and independence in violation of core accounting standards. The letter is part of a broader campaign by Republican state officials targeting ESG-related practices in the financial sector, including a similar April 2026 inquiry into credit-rating agencies Moody’s, Fitch, and S&P, and comes as the SEC under Chair Atkins has moved to formally rescind the Biden-era climate-related disclosure rules.

The letter also raises potential state consumer-protection-law and government-contract violations, arguing that the firms may have misrepresented their independence to clients when performing audits while simultaneously advocating for expanded climate disclosures. The AGs asked the Big Four to identify revenue earned over the past five fiscal years from climate-related assurance and ESG consulting services, to explain the impact of their affiliations on small businesses and farmers in public-company supply chains, and to produce documents related to the time horizons used for climate-related disclosures in audits.

For the Big Four, the letter presents both reputational and operational risk, particularly for firms still providing sustainability-related advisory and assurance services internationally. For public companies and their audit committees, the development is a reminder that the political and regulatory environment around climate-related reporting remains unsettled and that the independence of auditors and assurance providers in this space is under increasing scrutiny.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.