Trump Targets Proxy Advisors with New Executive Order

On December 11, 2025, President Donald Trump signed an executive order titled "Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors." This directive aims to increase oversight of the proxy advisory industry, specifically targeting Institutional Shareholder Services (ISS) and Glass Lewis, which together control over 90% of the market. The order accuses these firms of using their influence to promote politically motivated agendas, particularly in areas related to diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) initiatives.

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The executive order mandates several actions from federal agencies, including the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Department of Labor (DOL). Key directives include:

ESG Dive

• Review of Existing Regulations: The SEC is instructed to assess and potentially revise rules related to proxy advisors, particularly those that intersect with DEI and ESG policies.

Implications of New White House Executive Order on Proxy Advisory Firms

• Antitrust Investigations: The FTC is tasked with reviewing ongoing state-level investigations into proxy advisors to determine if their practices violate federal antitrust laws.

Trump Orders Crackdown on Proxy Advisors for Supporting ESG, DEI

• Fiduciary Responsibilities: The DOL must evaluate whether proxy advisors should be classified as investment advice fiduciaries under the Employee Retirement Income Security Act (ERISA), ensuring that their recommendations align with the financial interests of plan participants.

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The order reflects a growing concern among the Trump administration regarding the influence of foreign-owned proxy advisors on corporate governance and investment decisions. The administration argues that these firms have shifted focus from maximizing investor returns to promoting non-financial objectives. This sentiment is echoed by Secretary of Labor Lori Chavez-DeRemer, who stated that the order aims to restore order to financial markets and protect American investors from politicized corporate voting patterns.

US Department of Labor applauds President Trump’s bold directive to rein in politicization of capital markets by proxy services

Critics of the executive order, including the shareholder advocacy nonprofit As You Sow, argue that the potential repeal of Rule 14a-8, which governs shareholder proposals, overlooks the financial benefits of such proposals. Danielle Fugere, President and Chief Counsel of As You Sow, emphasized that raising issues of concern with companies is a vital mechanism for informed investment decisions. Additionally, proxy advisors like ISS and Glass Lewis maintain that they do not dictate corporate governance standards and operate in the best interests of their clients.

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While the executive order aims to curb the influence of proxy advisors, it follows a federal judge's preliminary injunction against a Texas state law targeting these firms, which was deemed a form of viewpoint discrimination. This legal backdrop raises questions about the effectiveness of the order and the potential for further legal challenges from the proxy advisory industry.

Implications of New White House Executive Order on Proxy Advisory Firms

The executive order sets the stage for a comprehensive review of regulations governing proxy advisors, with implications that could reshape the landscape of corporate governance and investment practices in the U.S. Stakeholders, including investment managers and corporate boards, are advised to monitor forthcoming regulatory actions closely, as these changes may significantly impact proxy voting practices and fiduciary responsibilities.

Implications of New White House Executive Order on Proxy Advisory FirmsTrump Targets Foreign Proxy Giants, Aiming to Reclaim America’s Retirement DollarsTrump targets proxy advisors with executive order aimed at investor protectionESG Dive

• “This bold directive will benefit millions of American workers and retirees who have unknowingly had their investment decisions hijacked by foreign actors with misguided motivations.” — Lori Chavez-DeRemer, U.S. Secretary of Labor

US Department of Labor applauds President Trump’s bold directive to rein in politicization of capital markets by proxy services

• “Similarly, hiring proxy advisors to gather information and make recommendations is not a sinister plot that must be investigated and curbed, but an important mechanism to inform the sound investment of capital.” — Danielle Fugere, President and Chief Counsel, As You Sow

ESG Dive

• “ISS 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.” — ISS Spokesperson

Reuters

This executive order marks a significant shift in the regulatory landscape for proxy advisory firms, reflecting broader concerns about the intersection of finance and political agendas in corporate governance.

Trump targets proxy advisors with executive order aimed at investor protection