Canada may not be the target, but shifting US rules on ISS and Glass Lewis could still ripple through Canadian proxy seasons
Proxy advisors that help big investors decide how to vote on ESG and diversity are now the target of a new US executive order that aims to rein in their influence over corporate America.
US President Donald Trump signed an order directing regulators to tighten oversight of the proxy advisory industry, according to Reuters.
The move focuses on Institutional Shareholder Services (ISS) and Glass Lewis, which guide institutional investors on how to vote in corporate elections and on shareholder proposals.
Trump argues these firms often “advance and prioritize radical politically-motivated agendas.”
As per Bloomberg, the order tells the chair of the US Securities and Exchange Commission to review rules, guidance and other materials on proxy advisors.
It also urges the chair to consider “revising or rescinding” anything that conflicts with the order’s purpose, “especially to the extent that they implicate ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ policies.”
The order cites ISS and Glass Lewis for having “supported shareholder proposals requiring American companies to conduct racial equity audits and significantly reduce greenhouse gas emissions.”
It adds that “one continues to provide guidance based on the racial or ethnic diversity of corporate boards.”
The order says their “practices also raise significant concerns about conflicts of interest and the quality of their recommendations,” and calls for more oversight to promote “accountability, transparency, and competition.”
According to Reuters, Republican politicians, business groups and executives including JP Morgan CEO Jamie Dimon and Elon Musk have long argued that ISS and Glass Lewis exert too much influence over director elections and say‑on‑pay votes.
Bloomberg added that the move fits into a broader push by Trump and his allies against diversity and equity initiatives, efforts to address climate change and other corporate practices they oppose.
ISS and Glass Lewis are already under US Federal Trade Commission investigation over whether they may have breached US antitrust laws by giving advice on politically charged topics.
The new order tells the FTC chair to work with the US attorney general to review ongoing state antitrust investigations into proxy advisors for possible federal antitrust issues.
Both firms have adjusted their approaches on environmental and social issues.
Reuters reported that, amid backlash against environmental and social investing, ISS and Glass Lewis recommended far fewer climate proposals this year.
ISS also stopped considering boardroom diversity in its director recommendations, while Glass Lewis said last month it will register as an investment adviser, aligning its status with ISS and addressing a possible requirement cited in Trump’s order.
Bloomberg added that Glass Lewis plans to stop offering a single “house view” benchmark recommendation from the 2027 shareholder season.
The firms continue to face political and legal pressure, but they have notched some court wins.
Reuters said a federal judge blocked Texas from enforcing a law that restricts proxy advisors from counselling shareholders on diversity and environmental matters.
A federal appeals court also ruled that ISS does not “solicit” proxy votes.
That decision leaves 2020 proxy adviser rules on hold that could have forced public disclosure of recommendations.
ISS and Glass Lewis have defended their practices.
An ISS spokesperson said the firm will review Trump’s order and consider its next steps, “including to help mitigate any potential adverse impacts on clients,” according to Reuters.
The spokesperson stressed that ISS is an SEC‑registered investment adviser that “does not dictate or set corporate governance standards and remains firmly committed to operating professionally, ethically, independently, and in the best interests of our clients, as we have done historically.”
A Glass Lewis spokesperson said the firm appreciates the “clarity” the order provides on what the administration expects and that it has “always operated with the highest ethical standards with our clients being central to everything we do,” Reuters reported.
For investors relying on third‑party research in proxy season, the order signals more US regulatory and political scrutiny of how proxy advice intersects with “diversity, equity, and inclusion” and “environmental, social, and governance” policies.
It also points to potentially tighter constraints on how firms like ISS and Glass Lewis shape corporate governance debates.
