New executive order targets proxy advisors and their impact on DEI and ESG initiatives 

President Trump signed an executive order Dec. 11 aimed at ending the “outsized influence of proxy advisors” ― claiming in a Fact Sheet that proxy advisors “prioritize radical political agendas over investor returns.” The order is the latest move in the administration’s crackdown on diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) matters and the shareholder proposal process. It directs the SEC, Federal Trade Commission (FTC) and Department of Labor (DOL) as follows:

• The SEC chair must review and rescind or revise regulations and guidance related to proxy advisors that implicate DEI and ESG, and rules related to shareholder proposals that are inconsistent with the order’s policies. As part of this mandate, the agency must enforce securities law anti-fraud provisions against proxy advisors with respect to their voting recommendations and also:
  • Consider whether to require proxy advisors to register as investment advisers,
  • Consider whether to require proxy advisors to increase transparency on conflicts of interest and their voting recommendations related to DEI and ESG,
  • Examine whether proxy advisors help investment advisers coordinate their voting decisions, and
  • Assess whether registered investment advisers breach their fiduciary duties by hiring and following proxy advisor voting recommendations on non-pecuniary factors, such as DEI and ESG.
• The FTC chair, in consultation with the attorney general, must investigate whether proxy advisors are in compliance with federal and state antitrust laws, and whether they are engaged in unfair methods of competition or fail to disclose conflicts of interest.
• The Secretary of Labor must strengthen ERISA fiduciary rules and increase fiduciaries’ transparency regarding their use of proxy advisors, including DEI and ESG investment practices, ensuring proxy advisors and plan managers act solely in the financial interest of retirement plan participants.

The order doesn’t specify timing for these actions and may be challenged in court. It’s the latest in a series of attempts by federal agencies, business groups and states to curb the influence of the proxy advisory industry and its two biggest players ― Institutional Shareholder Services (ISS) and Glass Lewis ― and remake the shareholder proposal process. The courts have dealt some setbacks to earlier SEC attempts to regulate proxy advisors, but ISS and Glass Lewis are already in the process of changing their business offerings in recognition of the current political reality and variances in investor priorities. For more information on the earlier developments and the new business offerings, see Evolving rules on proxy advisors, engagements and proposals shake up 2026 proxy season playbook.