Navigating Governance in Turbulent Times

Big changes to disclosure and other governance rulemaking from the SEC, and potentially Congress and the Trump administration, are coming in 2026.

These changes will affect how companies disclose information; how they engage with investors, proxy advisors and other stakeholders and how boards and management think about governance. Already on the SEC’s September regulatory agenda is the modernization of shareholder proposal rules and the rationalization of disclosure practices.[1] The SEC has also indicated that it is pursuing and considering President Trump’s suggestion to move from quarterly to semi-annual reporting and has declined to defend the prior administration’s climate-related disclosure rules in the Eighth Circuit, effectively abandoning them.

The traditional notice and comment rulemaking process will be forthcoming in some areas, likely with a phase-in period that affords companies time to adapt. However, companies also face the potential of fast paced changes based on legal or administrative developments. For example, the SEC’s recent changes to the shareholder proposal no action process following the government shutdown, legislative adoption of Section 16 reporting requirements for officers and directors of foreign private issuers[2] and the Trump administration’s Executive Orders on diversity, equity and inclusion (DEI) policies all arrived with little notice or guidance. State regulators have also been more vocal and active in pushing for governance changes, as well as changes in how investors and other stakeholders engage with companies. Potential future developments in macro trends and economic policies will further necessitate changes in governance and disclosure throughout 2026.

One area in particular that will bring change and a new focus on governance is AI. It is emerging as a megatrend of its own (bigger, but not unlike prior topics such as climate change and ESG). Outside of the expected regulatory changes, AI will continue to dominate the discussion of business opportunities and operations, as the potential benefits of AI are tangible. Boards and management will need practical tools to address the accompanying risks, uncertainties and changes to work and business that AI will bring. Companies will have to grapple with vendors and customers who will want to understand how AI is being utilized, and with investors who will take policy positions on AI use and its cost and benefit analysis.[3] In particular, boards of directors should focus on oversight of AI and understanding how management is thinking about both the benefits and risks to the overall business.

When rules, legal interpretations and administrative imperatives change rapidly, responding to normal governance matters with nuanced interpretation and sound judgment becomes harder. Going back to core governance and disclosure principles can help companies prepare for and navigate legal compliance and differing stakeholder pressures. We offer reminders on how to approach governance for the year ahead:

• Tailored Board Structures. Continue to tailor board and committee structures to what is important for your company. The annual review of charters, policies and delegations of authority should include discussions with board committees and management on current assignment of duties and any changes stemming from evolving practices or emerging board oversight topics. Clear delineation and agreement on oversight responsibilities allows management to quickly address developments with the right board constituents and enables directors to make decisions quickly, without confusion over who is responsible.
• Director Education and Engagement. Prepare directors and relevant committees for change to create a culture of adaptability. Many companies regularly brief boards on corporate governance updates. With new laws, rules and interpretations and growing divergence in stakeholder positions, it is all the more important for companies to consider how best to educate the board of new developments and set expectations for change. Board presentations and updates on new rules or developments may need to be more frequent than in prior years and may need to include broader discussion of the governance environment and differing stakeholder positions. Frequent advance communication helps directors anticipate changes and new rules or developments and allows boards to consider actions in advance. This creates a more flexible governance environment when changes are presented.
• Benchmarking and Supplemental Analysis. Annual benchmarking is an important exercise, but it only goes so far. For example, in 2025, many companies updated policies, programs and disclosures to align with the Trump administration’s Executive Orders relating to DEI. Companies followed different approaches given differing interpretations of the legality of these new executive pronouncements and their specific risk profiles (for example, government contractors may have additional risks to navigate).[4] Benchmarking against peer charters, governance policies and practices and disclosures, and reviewing governance trend studies can help companies see how other public companies are addressing change. These can be useful touchpoints as companies consider their own approaches. However, where rules or the legal landscape are still developing, companies must go beyond benchmarking alone (which could be out of date or still shifting) and consider the nuanced application to their internal circumstances and strategies.
• Long-Term Strategic Focus. Remain focused on core company strategies and developments. Shifting dynamics and divergent views on topics ranging from exercise of fiduciary duties to what constitutes shareholder value and the importance of ESG/DEI initiatives to long term success have created a landscape where investors, lawmakers, regulators, consumers and other stakeholders push companies in conflicting directions for information and action. In 2025, many multinational companies grappled with inconsistent climate disclosure regimes that conflicted across jurisdictions. Companies and boards facing conflicting pressures should focus on the underlying risks, opportunities and strategies for their business and embed the key factors into their long-term plans where possible rather than focusing on hot topics and buzz words. In general, compliance with conflicting legal regimes is difficult to manage a focus on oversight and long-term imperatives will help boards and management make risk-based decisions amid shifting rules and stakeholder pressures.
• Stakeholder Engagement. Refine messaging to stakeholders and update engagement. Companies should remain engaged with investors and other stakeholders. The SEC’s February 2025 guidance on control for purposes of Schedule 13D[5] and some political backlash against large institutional investors has shifted how some investors engage with companies, prompting certain investors to adopt a more listen-only posture. At the same time, the Trump administration and Congress have been critical of and directed executive action to investigate proxy advisors. With institutional investors taking a calibrated approach, the slow but growing use of fund pass through voting, proxy advisors in the administration’s focus and other investors and stakeholders across the political spectrum speaking up, companies should refine strategic messages, have clear and tailored talking points and consider their core investors.[6] Companies will want to revisit institutional investor guidelines and speak to key elements of governance and strategy. Companies should also follow developments relating to proxy advisory firms and innovations by high profile, well-resourced companies to redefine the proxy voting and shareholder engagement processes. ExxonMobil’s novel retail voting program is an example of a company that considered its investor base and modified its outreach and voting program in a manner intended to boost voting rates.[7] In another development, in January 2026, JPMorgan Chase announced its asset management division would cut ties with proxy advisors, instead relying on a new in-house AI powered tool to help it manage votes and analyze company proxies and disclosures.
• Materiality-Focused Disclosure. Take a back-to-basics approach on disclosure. The SEC is expected to propose rollbacks of some disclosure rules, including requirements around human capital and compensation disclosures. The SEC is also expected to limit detailed guidance on hot topics, like AI, outside of general materiality considerations. In the absence of more prescriptive guidance, companies should be ready to consider materiality to investors based on prior SEC guidance and interpretation, focusing on risks, opportunities and business trends. Similarly, when faced with economic and policy developments from military conflicts to international trade policies, companies should focus on the materiality to their business.
• Flexible Disclosure Controls. Review and consider changes to disclosure controls and committee structures to stay flexible in light of fast-moving changes. What can companies learn from disclosures around tariff “Liberation Day,” changes to DEI policies during proxy season and similar administrative shifts? Companies should consider how their disclosure processes worked in 2025 and consider changes to address gaps or create flexibility needed to quickly assess materiality, both qualitatively and quantitatively, for when future developments arise. Companies should also confirm the right internal constituents are on the disclosure committee and that mechanisms exist for quick review and response to new developments. 
• Crisis Management Lessons. Borrow from crisis management. Many companies have crisis policies (like cybersecurity incident response policies and emergency succession plans). Consider whether mechanisms from these policies or lessons from tabletop exercises can apply more broadly to governance. For example, identify a clear individual or management team to lead and guide in times of fast moving legal or market change.
• Monitoring Regulatory Developments. Last, it is more important than ever to follow various legal update channels and reporting and to partner with outside counsel and advisors. This helps companies stay abreast of legal updates and market insights and make informed decisions on whether and how to adopt changes as new rules and trends appear.

Boards and management will need to use all of these tools in the governance playbook—tailored board structures, director education and engagement, benchmarking and supplemental analysis, long-term strategic focus, stakeholder engagement, materiality-focused disclosure, flexible disclosure controls, crisis management and monitoring for regulatory developments—to successfully navigate the changes that are expected in the year ahead from the SEC and other regulators, the administration, investors and other stakeholders.

This article was prepared with contributions from Cleary practice development lawyer, Bobby Bee.

[1] SEC, “Agency Rule List – Spring 2025,” available here.

[2] Holding Foreign Insiders Accountable Act (HFIAA), S. 1071, 119th Cong. § 8103(b)(1) (hereinafter HFIAA) (engrossed amendment as passed by House, December 10, 2025). For additional information, see also our December alert announcing this change available here.

[3] For additional information on AI, see our AI articles available elsewhere in this memorandum.

[4] For additional information, see our DEI-related risks article available elsewhere in this memorandum.

[5] SEC Staff Guidance, “Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting” (last updated July 11, 2025), available here. For additional information, see our February alert memo available here.

[6] For additional information, see our shareholder engagement article available elsewhere in this memorandum.

[7] For additional information non applying a retail voting program in practice, see our October blog post available here.