How 2025 rewrote the rules of corporate governance for 2026 and beyond How 2025 rewrote the rules of corporate governance for 2026 and beyond

Political and regulatory shifts in Canada, the U.S. and globally reshaped several pillars of corporate governance in 2025, perhaps most visibly in relation to diversity- and sustainability-related initiatives and disclosure. Boards also continued to refine meeting mechanics and oversight of key risk areas. These developments will guide governance approaches for 2026 and beyond.

From momentum to maintenance: corporate diversity efforts

The diversity landscape evolved rapidly in 2025 amid significant political and regulatory change, particularly in the U.S. Executive orders issued by President Donald Trump affecting diversity, equity and inclusion (DEI) programs prompted many companies — especially those listed or having significant operations in the U.S. — to narrow or reframe their DEI communications. In parallel, some institutional investors and U.S. proxy advisory firms revised diversity-related voting guidelines.

Against this backdrop, the Canadian Securities Administrators (CSA) paused its work on expanding diversity disclosure requirements and expressly acknowledged international developments. Even so, during the most recent U.S. proxy season, shareholders consistently and strongly opposed anti-DEI proposals, while in Canada there were fewer anti-DEI proposals overall. Many companies continue to advance diversity initiatives, though in many cases, more quietly than before.

Data from our recent Diversity Disclosure Practices report shows a loss of momentum in the push towards board and executive officer diversity. The proportion of women on Canadian public company boards increased by just 0.7% year-over-year, the slowest pace since we began reporting. Nonetheless, boards of TSX-listed issuers crossed the 30% threshold for the first time, with women holding 30.5% of board seats.

A more significant shift occurred in how issuers describe their practices. After several years of stable or expanding compliance with mandatory diversity disclosure requirements, we saw a decline in 2025 in the proportion of issuers providing non-numeric diversity disclosure. Fewer issuers explained how they consider the representation of women on boards or in executive ranks when identifying or appointing candidates. Issuers providing such disclosures declined by 5.5% and 7.9%, respectively. Issuers also adjusted terminology, with a noticeable decline in references to “DEI.” In a number of cases, issuers narrowed the scope of narrative disclosures. Where detail was provided, companies more explicitly linked specific business needs to particular diversity initiatives, drawing clearer lines between strategy and practice.

The broader environment presents real challenges to sustained progress on diversity-related initiatives. Continued advancement will depend on companies identifying the strategic value of diverse leadership and building robust pipelines of capable, diverse senior talent. There are signs that this is happening, with anecdotal evidence suggesting that many organizations are maintaining underlying initiatives even as public disclosure becomes more measured and focused.

Canada’s anti-greenwashing provisions: a moving target

Following the 2024 amendments to the Competition Act aimed at combating greenwashing, the new private right of action came into force on June 20, 2025. Private parties, including advocacy groups, now have the right to bring applications before the Competition Tribunal grounded in public interest considerations. The Tribunal has not yet clarified how it will assess the public interest in this context, but uptake of the new remedy has been limited to date.

Notwithstanding the recent enactment of these amendments, the federal government signaled a potential recalibration in the 2025 federal budget. The budget proposed softening key elements relating to environmental matters, including removing the requirement that environmental benefit claims be substantiated using an internationally-recognized methodology, an area that had generated significant uncertainty for businesses. The government has also proposed eliminating the private right of action for greenwashing complaints. For further discussion regarding the amended Competition Act, see our Osler Legal Outlook article.

As an alternative to the private right of action, some groups have pursued complaints to securities regulators relating to sustainability-related disclosure. One recent complaint was noteworthy for its express choice to proceed under securities laws rather than through the Competition Act.

Climate- and sustainability-related disclosure

The CSA paused its work on proposed mandatory climate-related disclosure, citing concerns about market adjustment and competitiveness. These considerations are especially acute given divergent international approaches.

Global developments were mixed in 2025. In the U.S., the Securities and Exchange Commission (SEC) indicated it would cease defending litigation challenging its climate disclosure rules. The European Union continued negotiations on its “omnibus” package designed to simplify reporting obligations. By contrast, Australia completed its first year under a new mandatory regime for climate-related reporting.

In Canada, climate disclosure remains largely voluntary with two important exceptions. Federally regulated financial institutions are subject to mandatory requirements under OSFI Guideline B-15. In addition, existing securities law guidance requires disclosure of material climate-related risks.

These dynamics, coupled with the evolving legal and political environment, led many public companies to reduce, refine and refocus sustainability-related disclosures in 2025, balancing litigation and reputational risk against stakeholder expectations. Concerns that disclosure was becoming overly constrained influenced the federal government’s decision to revisit elements of the Competition Act’s anti-greenwashing amendments. The overall trend towards more targeted and decision-relevant sustainability disclosure is likely to continue into 2026.

Retail auto-voting: a potential counterbalance

Shareholder voting mechanics attracted attention this year, in part reflecting concerns about the increased proportion of shares voted by institutional (rather than retail) shareholders at company annual meetings. Exxon Mobil Corporation’s proposal to allow retail shareholders to opt in to vote their shares automatically in alignment with board recommendations raised important questions about this balance of influence. The SEC issued a no-action letter, signaling openness to this type of retail voting program.

Whether a program of this nature will be introduced in the Canadian public company context is likely to generate interest in 2026. Any such program would need to navigate the intersection of corporate statutes, securities regulation and the practical realities of proxy plumbing. At the same time, it would need to address governance considerations such as shareholder autonomy, informed voting and potential perception risks. The concept is poised to stimulate debate among boards, investors and regulators.

Looking ahead to 2026

The past year reinforced that governance practices can still be influenced by the broader political and regulatory environment. Diversity, shareholder engagement and transparency with respect to environmental and social matters will remain central for boards and management in the coming proxy season. Issuers can position themselves effectively by distilling diversity and sustainability disclosures to essential, decision-useful elements that demonstrate how initiatives support long-term resilience, operational performance and shareholder value. These shorter disclosures can be as or more effective if they are well grounded in the company’s business needs.

At the same time, evolving engagement dynamics — including retail auto-voting proposals and a continued risk of shareholder activism, which is discussed further in our Osler Legal Outlook article — underscore the importance of carefully calibrating stakeholder communications. Clear, credible communications can mitigate risk while reinforcing the company’s strategic narrative. Entering 2026, the governance environment calls for adjustment rather than retreat. Boards that integrate these considerations into oversight, disclosure and engagement practices will be better placed to manage uncertainty, meet stakeholder expectations and sustain long-term value creation.