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

On December 11, President Trump signed an executive order, titled Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors, aimed at ending the “outsized influence of proxy advisors” ― claiming proxy advisors “prioritize radical political agendas over investor returns.” The order is the latest move in a series of related steps by the administration and directs the SEC, Federal Trade Commission (FTC) and Department of Labor (DOL) as follows:

• The SEC chair shall review and consider revising or rescinding regulations and guidance related to proxy advisors that implicate diversity, equity and inclusion (DEI) and environmental, social and governance (ESG), and rules related to shareholder proposals that are inconsistent with the order’s policies. In addition, the agency shall:
  • Enforce securities law anti-fraud provisions against proxy advisors to the extent there are material misstatements or omissions in their voting recommendations and also:
  • Assess whether to require proxy advisors to register as investment advisers,
  • Consider requiring proxy advisors to increase transparency on conflicts of interest and their voting recommendations related to DEI and ESG,
  • Analyze whether proxy advisors help investment advisers coordinate their voting decisions, and
  • Examine whether registered investment advisers hiring proxy advisors and following their voting recommendations on non-pecuniary factors, such as DEI and ESG, is inconsistent with their fiduciary duties.
• The FTC chair, in consultation with the attorney general, shall investigate whether proxy advisors are in compliance with federal antitrust laws, and whether they are engaged in unfair methods of competition or fail to disclose conflicts of interest.
• The Secretary of Labor shall 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 interests of retirement plan participants.

The order doesn’t specify timing for these actions and the actions it prescribes may be subject to challenge. It’s the latest in a series of steps aimed at proxy advisory industry practices and curbing the influence of its two biggest players ― Institutional Shareholder Services (ISS) and Glass Lewis. The courts have dealt some setbacks to earlier SEC attempts to regulate proxy advisors, but ISS and Glass Lewis have publicly announced that they are adjusting their business offerings in recognition of the current political reality and variances in investor priorities. For more information on the earlier developments, see Evolving rules on proxy advisors, engagements and proposals shake up 2026 proxy season playbook