U.S. President Donald Trump has signed an executive order directing federal regulators to step up scrutiny of the proxy advisory industry, accusing leading firms of promoting what he described as “radical, politically motivated agendas”, the White House said.
Under the order, published on the White House website, Trump instructed the U.S. Securities and Exchange Commission (SEC) and other agencies to examine whether the two dominant proxy advisers — Institutional Shareholder Services (ISS) and Glass Lewis — have breached securities rules or antitrust laws in their handling of environmental and social issues. The order also asks regulators, including the Federal Trade Commission (FTC) and the Department of Labor, to consider potential new regulatory measures.
The move marks the latest conservative pushback against proxy advisers, which guide institutional investors on how to vote in corporate elections. Republican politicians, business groups and prominent executives — including JPMorgan CEO Jamie Dimon and billionaire Elon Musk — have long argued that the firms wield excessive influence over decisions such as board elections and executive pay.
In November, media reported that the White House was exploring ways to curb the power of proxy advisers. However, previous Republican-led efforts to restrict their activities have had mixed results, facing legal challenges and resistance from asset managers who say the firms help simplify increasingly complex shareholder voting decisions.
The executive order does not address proxy voting by large asset managers, an issue some trade groups had previously urged the White House to tackle. Expectations of action on that front have since cooled.
An ISS spokesperson said the company would review the order and assess its next steps, including measures to “mitigate any potential adverse impacts on clients”. ISS said it is registered with the SEC as an investment adviser and stressed that it does not set corporate governance standards, adding that it remains committed to operating “professionally, ethically, independently, and in the best interests of our clients”.
Glass Lewis did not immediately respond to requests for comment.
Trump’s order is part of a broader pattern of targeting specific industries and firms. He has previously criticised banks over alleged lending discrimination and taken aim at law firms he views as political adversaries. The president also highlighted the foreign ownership of the proxy advisers — another recurring line of Republican criticism. Germany’s Deutsche Börse acquired a majority stake in ISS in 2020, while Glass Lewis is owned by Canadian private equity firm Peloton Capital and chaired by Stephen Smith.
Both firms have recently been under scrutiny for their positions on contentious policy issues such as corporate disclosure of carbon emissions and workforce diversity. Amid a wider backlash against environmental and social investing, the advisers have scaled back some of their stances, including recommending fewer climate-related shareholder proposals. ISS has also stopped factoring boardroom diversity into director recommendations, while Glass Lewis has said it may register as an investment adviser.
Despite mounting pressure, the firms have scored key legal victories. In August, a federal judge blocked Texas from enforcing a first-of-its-kind law restricting proxy advisers from advising on diversity and environmental matters. In July, a federal appeals court ruled in favour of ISS, affirming that the firm does not “solicit” proxy votes — a decision that preserved a lower court ruling blocking proxy adviser regulations introduced in 2020.
Nonetheless, scrutiny continues. In November, Florida’s Republican attorney general sued both ISS and Glass Lewis, alleging violations of state consumer protection and antitrust laws, while Texas has launched a similar investigation. Trump’s order directs the FTC chair and U.S. Attorney General Pam Bondi to assess whether those state probes point to potential federal antitrust violations.
