House subcommittee addresses proxy advisory firms (2025)
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The House Financial Services Subcommittee on Capital Markets held a hearing last week on proxy advisory firms, which guide institutional investors on how to vote their shares.
Opponents say proxy firms promote ESG priorities in shareholder votes—especially Institutional Shareholder Services (ISS) and Glass Lewis, which control a combined 90% of the proxy advisory market. Critics also argue the firms have conflicts of interest.
The first Trump administration promulgated oversight rules to reduce the firms’ influence, but the Biden SEC rescinded them.
According to the Center Square:
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U.S. Rep. Ann Wagner, R-Mo., led the House Financial Services Subcommittee on Capital Markets. The hearing was titled "Exposing the Proxy Advisory Cartel: How ISS & Glass Lewis Influence Markets." "This hearing is part of an ongoing effort by this subcommittee to shine a lot on how the proxy process is functioning and, in many ways, failing today's markets," she said in her opening remarks. "The purpose of this hearing is to examine the role, practices and market influence of proxy advisory firms on corporate governance, investor returns and broader market outcomes." Wagner noted that two firms – Glass Lewis and Institutional Shareholder Services – control 97% of the market for such services. "That concentration alone would warrant scrutiny," she said. "But more troubling is how their influence goes far beyond research; they now routinely dictate outcomes of shareholder votes. ... These firms are not neutral observers, they are for-profit businesses that often sell consulting services to the very companies they evaluate – sometimes with clear conflicts of interest."[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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