SEC’s Peirce warns of markets becoming 'playground for politics'

Republican SEC Commissioner Hester Peirce expressed concern about forcing public companies into political and social issues, contending that it’s important to keep capital markets from becoming “a playground for politics of any stripe.”

“Public companies are confronting a symptom of a larger societal malady — importing politics and contentious social issues into everything we do,” Peirce said Jan. 27 at the 2025 Securities Regulation Institute, hosted by Northwestern Pritzker School of Law, according to her published remarks.

Peirce laid out steps for ensuring public companies “can focus on making products and services without embroiling themselves in political controversy,” one of which is “fending off efforts to commandeer the SEC’s disclosure regime,” she said, identifying the SEC’s climate-disclosure rule as an example.

That rule, finalized in March, would require public companies to disclose an array of climate-related information in their registration statements and periodic reports. After the rule had nine lawsuits filed against it, the 8th U.S. Circuit Court of Appeals in St. Louis agreed to hear the case on a consolidated basis, and the SEC in April voluntarily halted implementation of the rule while the court hears the case.

“We all have special interests, but endeavoring to stuff them all into securities filings undermines the reason we have such documents in the first place,” Peirce said, adding that “Europe, where sustainability disclosure requirements are unmoored from materiality and companies are losing focus on corporate value maximization, offers us a cautionary tale.”

Additionally, the Republican commissioner called for reforms to the way companies disclose their proxy votes, noting that "funds have to disclose votes by category, such as ‘environment or climate,’ ‘human rights or human capital/workforce,’ and ‘diversity, equity and inclusion,’" and funds "also have to disclose the number of shares voted and the number of shares loaned but not recalled and, therefore, not voted by a fund."

“These disclosure requirements, while enabling fund shareholders to monitor fund voting, also make asset managers sitting ducks for pressure campaigns from social and political activists and scrutiny by ESG (environmental, social and governance) rating providers,” she contended.

Peirce noted that “in the past decade, the number of shareholder proposals related to environmental and social issues has risen steadily,” and said these proposals impose both a monetary cost and “much larger opportunity cost as management and the board of directors divert their attention away from the day-to-day business of maximizing corporate value to deal with the often picayune issues at the heart of shareholder proposals.”

Her speech comes just days after President Donald Trump issued an executive order mandating federal agencies to determine which universities, foundations and corporations should be investigated for their DEI policies.

Specifically, the order directs each agency to identify up to nine “potential civil compliance investigations” of public corporations, large nonprofit corporations or associations, state and local bar and medical associations, foundations with more than $500 million in assets and higher education institutions with endowments of more than $1 billion.

In her remarks, Peirce called for revisiting the SEC rule that governs the process for public companies to include shareholder proposals in their proxy statements, and she encouraged the commission’s “expert staff to engage with public companies and their lawyers and accountants on difficult questions about the application of new and existing rules.”

Ultimately, Peirce contended, “our capital markets are designed to serve all Americans, regardless of their political ideology,” and “we do not need to invite our political disagreements into every corner of our lives.”