When ordinary individuals and families invest their hard-earned money in corporate America, they expect that companies will act to maximize their returns. They might be dismayed to learn that policy, priorities, and governance decisions are often instead steered by proxy advisers — opaque consultants that have no fiduciary responsibility to investors and a long record of putting “woke” ideology ahead of profitability.
During his first term, President Donald Trump directed his Securities and Exchange Commission to provide transparency into this obscure industry. In 2020, the SEC adopted regulations that required proxy advisers to notify companies of their recommendations before distributing those to shareholders, granted leeway for companies to reject votes on non-business-related social and ethical matters, mandated that proxy firms disclose conflicts of interest, and allowed these companies to be sued for misleading investors.
These were practical consumer protections that any investor should appreciate. Yet, two years later, the Biden-Harris administration overturned the SEC rules “to avoid burdens on” proxy advisers. That should not come as a surprise. President Joe Biden attempted to foist the most liberal social and environmental agenda in history onto the public, so why restrain an industry that hocks the same far-left orthodoxy?
With little regulatory oversight, proxy advisers have become the mantle-bearer of the far-left’s social and environmental agenda. As my former colleague, Rep. Bill Huizenga (R-MI), chairman of the House Financial Services Subcommittee, put it: “Proxy adviser firms have hijacked the shareholder process, becoming the de facto standard setters for corporate governance policies.” And as the Biden administration sought to bypass Congress with its environmental, social, and governance policies, “their influence has grown.”
More alarmingly, Glass, Lewis & Co. (Glass Lewis) and Institutional Shareholder Services control a duopoly in the proxy industry. These foreign-owned companies command a 97% market share and utilize separate “consulting service” divisions to influence corporate behavior to further align with their ideology. Theirs is a self-fulfilling playbook: Spoon-feed companies liberal policies out of one hand, even if those don’t serve investors, and then prod shareholders to vote for them with the other. One study found that 175 asset managers in charge of more than $5 trillion of assets voted with ISS over 95% of the time.
Trump’s return to office promises to dismantle the left’s cultural crusade and get America back to the business of doing business. Flagship U.S. companies such as Walmart, McDonald’s, Lowes, and Amazon recently announced they are ditching nonsensical DEI hiring policies. Our country’s six largest banks and asset managers left the Net Zero Banking Alliance, a climate initiative that prevented investors from participating in America’s domestic energy renaissance.
Even before Trump’s reelection, investors were growing tired of corporate wokeism. In 2024, only 1.4% of ESG resolutions received a majority vote, down from 21% two years earlier. But that’s not to say Glass Lewis and ISS aren’t still pushing. The firms supported nearly 40% and 70% of the resolutions last year, respectively. Most were ultimately rejected only because large asset managers refused their recommendations.
Still, proxy advisers shouldn’t get a pass. Glass Lewis and ISS continue to exert tremendous sway over corporations, and their agenda is as radical as ever. Trump’s plate is full of cleaning up the many messes created by his predecessor, but I expect he will direct his SEC chairman to pick up his first-term proxy regulations, which the Biden team tried to kill in the crib.
Trump certainly has the right guy for the job with Paul Atkins. A former SEC commissioner (2002-2008), Atkins tempered calls for increased federal policing on Wall Street in the wake of Enron, and he wasn’t afraid to criticize heavy-handed policies such as Dodd-Frank. Even more impressive, he hasn’t minced words about corporate activism.
Activist groups “have been very open about what their goal is. And that is to put pressure on corporations through the shareholder proposal process,” Atkins said in 2012. “They do it all over the Fortune 500, which then gives them a megaphone of free publicity through the process and through harassment.”
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Atkins criticized “pension-fund activism” and legislation that would have directed the SEC to require companies to report fossil fuel use and greenhouse gas emissions. In 2015, when divestment and ESG were nascent offshoots of the Occupy movement, Atkins said proxy voting “isn’t about transparency and good governance but is instead an effort by political activists to silence the business community.”
For too long, proxy advisers have been the tail wagging the dog, peddling liberal politics over good governance. Trump had the wisdom in his first term to lay the groundwork to begin breaking up this cartel, and after four years of impunity under the Biden administration, there’s reason to believe the Trump team will take it up again. Ordinary investors should hope they do.
Ken Buck is a former U.S. congressman from Colorado who served on the Judiciary and Foreign Affairs committees.