Governing Sustainability in a Shifting Context (A)

In early 2025, boards of directors had to rethink corporate responsibility and sustainability efforts amid rapidly-shifting social, legal, regulatory, and economic forces. While just a few years earlier, calls to address racial justice and climate change reached into boardrooms, the pendulum seemed to swing the other way. A landmark 2023 U.S. Supreme Court rejecting race-conscious college admissions as unconstitutional sent shockwaves through corporate America for its potential to be applied in other contexts; a surge in so-called “anti-ESG” shareholder proposals sought to compel companies to undo diversity and environmental initiatives; and other social and regulatory changes found boards and business leaders at companies of all sizes grappling with difficult decisions about the role of corporations in society. This note includes five selected examples, including Tractor Supply addressing DEI programs and climate targets after an activist launched a social media campaign; McDonald’s navigating a high-stakes lawsuit over its long-standing Hispanic scholarship program; Costco confronting a shareholder proposal questioning its diversity programs; Wells Fargo debating whether or not to keep climate-related goals in the face of changing regulatory and legal dynamics; and Banco Santander considering multinational dynamics involving whether to use a diversity-focused executive compensation metric in all its markets or only in some markets, depending on regional legal and regulatory differences.