President Donald Trump has signed an executive order directing US regulators to rein in the influence of proxy advisory firms, naming Institutional Shareholder Services (ISS) and Glass Lewis and accusing them of using their market power to push “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) priorities in corporate voting.

The order says ISS and Glass Lewis control more than 90% of the proxy advisory market and significantly shape how large institutional investors vote on board elections, executive pay and shareholder proposals at major US companies. It frames DEI and ESG as “politically‑motivated” and says investor returns should be the priority.

What the order does:

• Securities and Exchange Commission: The SEC chair is told to review and consider revising or rescinding rules and guidance on proxy advisors and shareholder proposals, including Rule 14a‑8, where they are “inconsistent with the purpose” of the order. The SEC is asked to enforce anti‑fraud provisions against material misstatements in proxy advice; assess requiring proxy advisors to register as investment advisers; increase transparency on methodologies, recommendations and conflicts; and examine whether investment advisers’ reliance on proxy advisors for non‑pecuniary factors is consistent with fiduciary duties.
• Federal Trade Commission: The FTC, working with the Department of Justice, is directed to examine potential unfair, deceptive or anticompetitive practices by proxy advisors, including conflicts of interest, misleading information and conduct that could diminish consumer investment value. It also calls for a review of state antitrust investigations for possible federal action.
• Department of Labor: The Labor Secretary is told to tighten fiduciary standards for pension and retirement plans under ERISA, including considering whether proxy advisors should be treated as investment advice fiduciaries when influencing plan votes. The department is also asked to boost transparency around the use of proxy advisors, particularly on DEI and ESG.

Any rule changes would need to go through the US administrative rulemaking process, including public consultation. The order does not itself change SEC, FTC or Labor Department rules.

Why it matters here:

• Global reach: ISS and Glass Lewis advise investors worldwide. Changes to their US obligations could alter how research is produced, how recommendations are disclosed, and how shareholder proposals—especially on climate and workforce issues—are handled across global portfolios.
• KiwiSaver and institutional investors: Many global managers used by KiwiSaver providers and other local institutions rely on proxy research to execute votes in US markets. If US rules narrow the scope of proposals or prioritise strictly financial factors, voting policies and stewardship practices could shift.
• Corporate governance: US-listed companies that New Zealand funds hold are frequent targets of shareholder proposals on emissions, human rights and board composition. If the SEC tightens the criteria for filing or supporting those proposals, fewer such resolutions may reach ballots.

The order highlights the ownership and market concentration of ISS and Glass Lewis and raises concerns about conflicts of interest and the quality of recommendations. It also asks regulators to probe whether use of proxy advisors by investment firms could amount to coordinated voting under US securities law.

The direction continues a broader political contest in the US over ESG investing and corporate sustainability. Any concrete changes will depend on how the SEC, FTC and Labor Department interpret the order and what regulations they propose.