On December 11, 2025, President Trump signed an executive order titled “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors” (the Order), which explicitly names both Institutional Shareholder Services (ISS) and Glass Lewis. The Order expresses particular concern that proxy advisors are using their influence over shareholder proposals, board composition, and executive compensation to prioritize “radical politically-motivated agendas,” including diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) matters.
The Order notes that investor returns should be the only priority in advising investors and directs the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), and Department of Labor (DOL) to increase oversight of proxy advisors and assess their practices under applicable laws.
The Order is not expected to directly impact proxy advisory firms for the upcoming 2026 proxy season, but it may indirectly impact their influence by focusing attention on the actions of proxy advisors and their clients. While the Order does not include any deadlines for regulatory action, we expect that the SEC, FTC, and DOL will act upon the directives addressed to each of them in the Order in the next year in ways that may well fundamentally reshape the proxy advisory landscape in 2027 and beyond.
The Order directs the SEC to review all rules and guidance related to proxy advisors and to consider revising these rules to the extent they are inconsistent with the Order’s priorities, particularly with regard to DEI and ESG matters.
Specifically, the Order directs the SEC Chairman to:
The Order instructs the FTC Chairman, in consultation with the US Attorney General, to consider whether ongoing state antitrust investigations of proxy advisors raise issues under federal antitrust laws. Further, the Order requires the FTC, again in consultation with the US Attorney General, to assess whether proxy advisors engage in unfair competition or deceptive acts (e.g., collusion, conflicts of interest, inaccurate information, or other factors that prevent investors from making informed decisions).
The Order directs the Secretary of Labor to (1) revise the department’s existing regulations and guidance regarding the fiduciary status of those who manage, or — “like proxy advisors,” advise those who manage — the rights appurtenant to shares held by employee benefit plans subject to ERISA, including with respect to proxy votes and corporate engagement, and (2) consider specifying that anyone “who has a relationship of trust and confidence with their client, including any proxy advisor,” and who provides advice for direct or indirect compensation with respect to the exercise of rights appurtenant to shares held by ERISA plans is an investment advice fiduciary.
The Secretary of Labor is further directed to (1) take action to strengthen fiduciary standards, including by assessing whether proxy advisors act solely in the financial interests of plan participants and whether their practices undermine the pecuniary value of retirement assets, and (2) enhance transparency associated with the use of proxy advisors and investment practices based on DEI and ESG considerations.
The Order signals the onset of intensified federal scrutiny of proxy advisory firms that may lead to regulatory changes, litigation, and/or other enforcement actions, and comes in the wake of state-level laws, litigation, and other actions by Texas and Florida, among others, regulating or otherwise challenging proxy advisor practices, including under state consumer protection and antitrust laws.
The prospect of declaring proxy advisory firms as ERISA fiduciaries may curtail certain practices of proxy advisory firms, including providing guidance that focuses on factors that may be considered non-pecuniary, and may subject proxy advisory firms to additional regulatory oversight and claims (including potentially from plan participants). Moreover, additional DOL scrutiny and fiduciary regulation may create tension for proxy advisory firms between a desire to give client-specific guidance (which could increase the risk of being a fiduciary) and limiting advice to only generic statements that do not take into account client-specific considerations (in an attempt to avoid fiduciary status).
ISS and Glass Lewis have already begun to modify their practices in light of mounting regulatory pressure — notably, Glass Lewis has announced that beginning in 2027 it will move to more customized or thematic proxy voting guidelines rather than a single “house” recommendation in order to provide its clients with voting recommendations more closely aligned with the client’s priorities. In its North American and ESG Guidelines Webinar on December 16, 2025, Glass Lewis explained that its new thematic voting recommendations will fall into four “perspectives” to reflect the varied viewpoints of its clients, though it noted that these perspectives are still being fleshed out.
In addition, ISS has revised its proxy voting guidelines to provide that beginning with the 2026 proxy season it will no longer generally recommend voting for environmental and social proposals and will instead evaluate these proposals on a case-by-case basis. We expect more changes may come. ISS and Glass Lewis may also challenge the effectiveness of any rulemaking resulting from the Order.
In any event, the Order is likely to have a significant impact on the operation of proxy advisors and the proxy disclosure practices of public companies, in particular practices and disclosures relating to DEI and ESG.