The administration’s battle against ESG and DEI recently escalated with the signing of Executive Order (EO) 14366. The EO entitled “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors” names Glass Lewis and ISS, stating that the firms wield outsized influence on American capital markets. The EO takes issue with past ESG and DEI-related proxy guidelines, claiming these are at odds with financial returns and fiduciary duties. The EO empowers the SEC, as well as other agencies, to revisit proxy advisory rules and explore litigation against proxy advisors. A recent Sullivan & Cromwell memo discusses the impact of the new EO:
“The full impact of the Order across the proxy ecosystem will depend on how the SEC, FTC, Department of Labor and other agencies interpret and implement its policy directives. As of the date of the Order, the FTC has already confirmed that it has launched an investigation into ISS and Glass Lewis. In a November 2025 interview, SEC Chairman Paul Atkins also stated that the SEC is focused on the influence of proxy advisory firms in the area of corporate governance, and intends to examine the “entire area” within “the next year,” including any actions by institutional investors and money managers who position themselves in the marketplace and with the SEC as passive investors to influence management of the companies in which they invest.”
Thus far, ISS has responded to the EO, stating in part:
“Our clients are sophisticated institutional investors who determine how they wish to vote in accordance with their own differentiated investment objectives by selecting from a range of voting policies that guide our work on their behalf, or by creating customized policies for advice tailored to their own particular needs. ISS does not dictate or set corporate governance standards and remains firmly committed to operating professionally, ethically, independently, and in the best interests of our clients, as we have done historically.”
The EO also states that the federal government is looking at ongoing antitrust litigation in Texas and may bring similar litigation against proxy advisors at the federal level. This is a continuation of a trend we’ve seen emerge in 2025: the federal government adopting anti-ESG strategies tested at the state level. For now, we’ll have to wait until the agencies take action to see the full impact of the EO.
Our members can read more about anti-ESG here.
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