Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors
This Presidential Action directs multiple federal agencies to increase oversight, transparency, and competition within the proxy advisor industry, which is dominated by two foreign-owned firms, Institutional Shareholder Services and Glass, Lewis & Co.
The order specifically mandates that the Securities and Exchange Commission (SEC) review and potentially revise rules related to proxy advice and shareholder proposals, focusing on eliminating advice based on non-pecuniary factors like DEI and ESG. Furthermore, it tasks the Federal Trade Commission (FTC) with investigating antitrust concerns and requires the Department of Labor to strengthen fiduciary standards under ERISA to ensure proxy advice serves the sole financial interest of retirement plan participants.
Arguments For
Restoring focus to investor returns by scrutinizing proxy advisors that promote "diversity, equity, and inclusion" (DEI) and "environmental, social, and governance" (ESG) agendas over financial performance.
Increasing transparency and accountability within the proxy advisor industry, which is heavily concentrated (over 90% market share by two firms), thereby mitigating potential conflicts of interest.
Enhancing fiduciary protections for assets held in retirement plans governed by ERISA by ensuring advice is solely in the financial interest of plan participants.
Strengthening Federal securities law enforcement against material misstatements or omissions in proxy voting recommendations issued by these advisors.
Arguments Against
Potential chilling effect on corporate consideration of material non-financial risks or broader stakeholder interests, as determined by investment managers.
Overreach by the Executive Branch into the regulatory authority of independent agencies like the SEC and FTC, potentially leading to regulatory uncertainty.
Risk of stifling competition or innovation in corporate governance advice by imposing onerous registration or disclosure requirements on proxy advisors.
Questioning the premise that ESG and DEI factors are inherently "politically-motivated" rather than integrated risk management strategies valuable to long-term investment.
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
This opening establishes the legal foundation, stating that the President is issuing this directive based on the constitutional and statutory authority granted to the office.
Section 1. Purpose. Unbeknownst to many Americans, two foreign-owned proxy advisors, Institutional Shareholder Services Inc. and Glass, Lewis & Co., LLC, play a significant role in shaping the policies and priorities of America’s largest companies through the shareholder voting process. These firms, which control more than 90 percent of the proxy advisor market, advise their clients about how to vote the enormous numbers of shares their clients hold and manage on behalf of millions of Americans in mutual funds and exchange traded funds. Their clients’ holdings often constitute a significant ownership stake in the United States’ largest publicly traded companies, and their clients often follow the proxy advisors’ advice.
The stated purpose is to address the large, often unnoticed, influence of two major foreign-owned proxy advisory firms, ISS and Glass, Lewis, which control over 90% of the market.
These firms advise clients, who manage funds for millions of Americans, on how to vote shares in major U.S. companies.
As a result, these proxy advisors wield enormous influence over corporate governance matters, including shareholder proposals, board composition, and executive compensation, as well as capital markets and the value of Americans’ investments more generally, including 401(k)s, IRAs, and other retirement investment vehicles. These proxy advisors regularly use their substantial power to advance and prioritize radical politically-motivated agendas — like “diversity, equity, and inclusion” and “environmental, social, and governance” — even though investor returns should be the only priority. For example, these proxy advisors have supported shareholder proposals requiring American companies to conduct racial equity audits and significantly reduce greenhouse gas emissions, and one continues to provide guidance based on the racial or ethnic diversity of corporate boards. Their practices also raise significant concerns about conflicts of interest and the quality of their recommendations, among other concerns. The United States must therefore increase oversight of and take action to restore public confidence in the proxy advisor industry, including by promoting accountability, transparency, and competition.
This paragraph explains the concern that these advisors use their significant influence over corporate governance (like board makeup and executive pay) and investment value (including retirement accounts) to push politically motivated agendas, specifically naming DEI and ESG initiatives.
The order mandates increasing oversight, accountability, transparency, and competition to restore public confidence.
Sec. 2. Protecting Investors from Politicized Advice. (a) The Chairman of the Securities and Exchange Commission (SEC) shall review all rules, regulations, guidance, bulletins, and memoranda relating to proxy advisors. Consistent with the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq.), the SEC Chairman shall consider revising or rescinding those rules, regulations, guidance, bulletins, and memoranda that are inconsistent with the purpose of this order, especially to the extent that they implicate “diversity, equity, and inclusion” and “environmental, social, and governance” policies.
Section 2 directs the SEC Chairman to review all existing rules and guidance concerning proxy advisors.
The Chairman must consider revising or canceling any rules inconsistent with the order's purpose, specifically targeting those related to DEI and ESG policies, while following the Administrative Procedure Act (APA).
(b) Consistent with the APA, the SEC Chairman shall consider revising or rescinding all rules, regulations, guidance, bulletins, and memoranda relating to shareholder proposals, including Rule 14a-8 (17 CFR 240.14a-8), that are inconsistent with the purpose of this order.
The SEC Chairman is also instructed to review and potentially repeal rules concerning shareholder proposals, such as Rule 14a-8, if those rules conflict with the goals outlined in the order, adhering to the APA.
(c) The SEC Chairman shall:
(i) enforce the Federal securities laws’ anti‑fraud provisions with respect to material misstatements or omissions contained in proxy advisors’ proxy voting recommendations;
(ii) assess whether to require proxy advisors whose activities fall within the scope of the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) and the rules promulgated thereunder, to register as Registered Investment Advisers;
(iii) consider requiring proxy advisors to provide increased transparency on their recommendations, methodology, and conflicts of interest, especially regarding “diversity, equity, and inclusion” and “environmental, social, and governance” factors;
(iv) analyze whether, and under what circumstances, a proxy advisor serves as a vehicle for investment advisers to coordinate and augment their voting decisions with respect to a company’s securities and, through such coordination and augmentation, form a group for purposes of sections 13(d)(3) and 13(g)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.); and
(v) direct SEC staff to examine whether the practice of Registered Investment Advisers engaging proxy advisors to advise on (and following the recommendations of such proxy advisors with respect to) non-pecuniary factors in investing, including, as appropriate, “diversity, equity, and inclusion” and “environmental, social, and governance” factors, is inconsistent with their fiduciary duties.
This subsection mandates five specific actions for the SEC Chairman.
These include enforcing anti-fraud provisions against misleading proxy advice, evaluating if advisors should register under the Investment Advisers Act, increasing transparency regarding methodology and conflicts (especially over ESG/DEI), analyzing whether advisors cause investment advisers to illegally coordinate group voting, and examining whether following non-pecuniary advice violates fiduciary duties.
Sec. 3. Unfair, Deceptive, or Anticompetitive Practices. (a) The Chairman of the Federal Trade Commission (FTC), in consultation with the Attorney General, shall review ongoing State antitrust investigations into proxy advisors and determine if there is a probable link between conduct underlying those investigations and violations of Federal antitrust law.
Section 3 directs the FTC Chairman, working with the Attorney General, to review any state-level antitrust investigations into proxy advisors.
The goal is to determine if the underlying conduct also violates federal antitrust laws.
(b) The FTC Chairman, under the authorities provided in the Federal Trade Commission Act (15 U.S.C. 41 et seq.) and in consultation with the Attorney General, as appropriate, shall investigate whether proxy advisors engage in unfair methods of competition or unfair or deceptive acts or practices that harm United States consumers by:
(i) conspiring or colluding, explicitly or implicitly, to diminish the value of consumer investments (including pensions and retirement accounts);
(ii) failing to adequately disclose conflicts of interest;
(iii) providing misleading or inaccurate information;
(iv) undermining the ability of consumers to make informed choices; or
(v) otherwise engaging in conduct that violates the antitrust laws as defined in 15 U.S.C. 12(a) or section 5 of the Federal Trade Commission Act (15 U.S.C. 45).
The FTC Chairman must investigate proxy advisors for unfair and deceptive practices harming consumers.
This investigation covers potential issues like implicit collusion that lowers investment value, failure to disclose conflicts, providing false information, or impeding consumers' ability to make sound financial choices, all under the scope of the FTC Act and antitrust laws.
Sec. 4. Protecting Pensions and Retirement Plans. (a) The Secretary of Labor shall, consistent with the APA, take steps to revise all regulations and guidance regarding the fiduciary status of individuals who manage, or, like proxy advisors, advise those who manage, the rights appurtenant to shares held by plans covered under the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. 1001 et seq.), including proxy votes and corporate engagement, consistent with the policy of this order. The Secretary of Labor shall consider whether these proposed revisions should include amendments to specify that any individual who has a relationship of trust and confidence with their client, including any proxy advisor, and who provides advice for a fee or other compensation, direct or indirect, with respect to the exercise of the rights appurtenant to shares held by ERISA plans, is an investment advice fiduciary under ERISA.
Section 4 instructs the Secretary of Labor to revise ERISA regulations concerning individuals advising on plan assets, including proxy voting.
The Secretary must consider amendments that would classify proxy advisors who provide paid advice regarding ERISA plan shares as investment advice fiduciaries under ERISA.
(b) The Secretary of Labor shall take all appropriate action to strengthen the fiduciary standards of pension and retirement plans covered under ERISA. Such action shall include assessing whether proxy advisors act solely in the financial interests of plan participants and the extent to which any of their practices undermine the pecuniary value of the assets of ERISA plans.
The Secretary of Labor must strengthen fiduciary standards for ERISA plans by assessing whether proxy advisors are acting exclusively in the financial interest of participants and evaluating if their practices negatively affect the monetary value of the plan's assets.
(c) The Secretary of Labor shall take all appropriate action to enhance transparency concerning the use of proxy advisors, particularly regarding “diversity, equity, and inclusion” and “environmental, social, and governance” investment practices.
This requires the Secretary of Labor to improve transparency around how proxy advisors are used, with a specific focus given to their recommendations related to DEI and ESG investment factors.
Sec. 5. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The costs for publication of this order shall be borne by the Department of Labor.
The final section outlines general provisions, confirming that the order does not impede existing authority granted to executive departments or the OMB’s budgetary functions.
It also states that the order must be implemented legally and within available funding, clarifies that it does not create new enforceable legal rights for any party against the government, and assigns the publication cost to the Department of Labor.
DONALD J. TRUMP
THE WHITE HOUSE,
December 11, 2025.
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This concludes the document, showing it was issued by President Donald J. Trump on December 11, 2025, and includes boilerplate information about where the announcement was originally posted online.