President Donald Trump promised to win so much that conservatives would be tired of winning. But some conservatives seem eager to cry victory too soon.
Last month, for example, conservatives vaunted the fact that Institutional Shareholder Services and Glass Lewis, two major proxy advisory firms, seem to be stepping back from their diversity, equity, and inclusion policies.
“Seem” being the key word.
On Feb. 11, ISS released a statement on Trump’s DEI executive orders, announcing that it would “indefinitely halt consideration of certain diversity factors in making vote recommendations with respect to directors at U.S. companies.” This announcement was broadly hailed as a decision from ISS to roll back its egregious DEI voting guidelines.
But closer inspection of the announcement reveals that’s not the case. Indeed, ISS’s statement only promised not to consider “gender and racial and/or ethnic diversity” of a board when recommending directors — completely leaving out any mention of any of its other policy recommendations.
In other words, ISS never promised to stop pursuing DEI or promoting environmental, social, and governance policies. It simply said that it would no longer consider some “diversity factors” when recommending board officials.
Glass Lewis’s so-called rollback is similar.
On Feb. 19, Glass Lewis sent clients a memo stating that they would be reviewing their DEI policies. The memo (the full text of which has not been publicly released) said that in light of the Trump administration’s position, Glass Lewis was considering whether it would be in its “clients’ best interest to change its approach.”
Yet nowhere did Glass Lewis state a firm commitment to retreating from DEI. Rather, it asserted a firm belief that “diversity contributes to improved company performance and long-term shareholder value.”
In short, these two statements seem nothing more than smokescreens intended to distract conservatives so that ISS and Glass Lewis can continue pushing their woke agendas without disruption.
And push them they will.
Over the past years, ISS and Glass Lewis have consistently voted to support ESG policies – a practice that led 23 state attorneys general in 2023 to issue a letter accusing them of “prioritizing ESG over fiduciary duties.” In this letter, the attorneys general pointed to the firms’ practice of promoting transparency on ESG issues (pushed by leftists) but not on issues like debanking (typically raised by conservatives).
Accusations of bias are not unfounded.
In 2022, Glass Lewis’s standard voting guidelines did not support a single proposal from a conservative group. Yet over the same period, it supported 53% of “social” shareholder proposals and 60% of environmental shareholder proposals. In their own letter on the subject, state financial officers dryly described this as “not appear[ing] to be even-handed treatment.”
The ”social” proposals supported by ISS and Glass Lewis include resolutions like one last year requiring a “racial equity audit” at McDonald’s.
Some conservatives have tried to fight back against corporate ESG via anti-ESG shareholder proposals. But those proposals have consistently received 2% or less of the vote — a result the attorneys general describe as directly attributable to the proxy firms’ influence.
Together, ISS and Glass Lewis have cornered 97% of the market on proxy voting. According to one report, 175 of the world’s largest asset managers vote with ISS 95% of the time. This power means that ISS and Glass Lewis alone can sway shareholder votes by between 10%-30% — quite literally giving them the power to shape the “choices and activity of businesses and ultimately the United States’ and global economy.”
And they show no signs of moving away from their woke guidelines.
Just four days before its “rollback” announcement, ISS recommended that Apple investors vote to uphold DEI there by rejecting an anti-DEI shareholder proposal. Following the announcement, some investors struggled to reconcile this with what they perceived as a sudden policy shift. Of course, the so-called policy shift isn’t a shift at all — it’s simply ISS virtue-signaling in an attempt to divert Trump and conservatives.
Conservatives shouldn’t be deluded into declaring full victory. Rather, we need to double down and require that ISS and Glass Lewis move away from ESG and DEI entirely.
But that isn’t enough. To coopt ISS and Glass Lewis to the conservative side wouldn’t solve the ultimate problem: their almost unilateral control over shareholder voting.
Companies should be responsible to shareholders themselves, not to vast proxy services that issue arbitrary voting recommendations in furtherance of their own ideology, regardless of what that might be.
It’s time ISS and Glass Lewis stop pursuing woke agendas and start working on behalf of shareholder interests. If that’s too hard, then perhaps it’s time for shareholders to retake control from deceptively named “proxy” advisers so they can have their say in how their money is being used.
Until this issue is fixed, the public will continue to see their life savings used to destroy our foundational values and to manipulate our culture. Only when the say is returned to shareholders — whether via proxy advisers or without them – should conservatives celebrate.
Mary Mobley is an Editorial Fellow at The Heritage Foundation.