Trump Signs Executive Order Targeting Proxy Advisors on ESG and DEI Issues
President Donald Trump moved decisively against what his administration describes as “foreign-owned and politically-motivated” proxy advisors on Monday, signing an executive order that could substantially reshape corporate governance in America.
The December 11 order directs the Securities and Exchange Commission to review and potentially rescind rules related to proxy advisors that push diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) priorities — fulfilling a campaign promise Trump made to keep politics “away from America’s retirement accounts forever.”
Taking Aim at Foreign Influence
The executive action specifically targets two dominant players in the proxy advisory industry: Institutional Shareholder Services (ISS) and Glass Lewis, which together control more than 90% of the market. Both firms are foreign-owned, a fact the White House highlighted prominently in its announcement.
“I will demand that funds invest your money to help you, not them,” Trump declared during his campaign, adding that retirement funds shouldn’t “help the radical left communists, because that’s exactly what they are.”
The timing of the order follows mounting legal and regulatory pressure on the proxy advisory industry. Just weeks earlier, on November 20, Florida’s attorney general launched an enforcement action against both ISS and Glass Lewis, alleging violations of state consumer protection and antitrust laws related to ESG demands.
Growing Legal Challenges
Is this just the beginning of a broader crackdown? The Federal Trade Commission has already initiated an investigation into whether the two firms violated federal antitrust laws, following reports that the Trump administration was preparing executive action.
Meanwhile, Texas has taken matters into its own hands. The state enacted SB 2337, requiring proxy advisors to disclose their use of nonfinancial factors such as ESG or DEI in their recommendations. That law faces legal challenges, with a federal judge issuing preliminary injunctions in August 2025 and a trial scheduled for February 2026.
Market Implications
The executive order represents a significant shift in how the federal government approaches proxy advisors, which provide institutional investors with recommendations on how to vote on corporate matters.
Critics of ESG and DEI initiatives have long argued that these priorities often come at the expense of financial returns, while supporters contend they represent material risk factors that responsible investors should consider.
What’s clear is that the battle lines over corporate governance philosophy have been drawn more sharply than ever. With multiple states already taking action and now the full weight of the federal government involved, proxy advisors face perhaps the most challenging regulatory environment in their history — and America’s investors are watching to see who ultimately controls the levers of corporate power.
