Missouri AG Sues Shareholder Voting Advisors ISS and Glass Lewis, Alleging Left-Wing Bias

Missouri Attorney General Andrew Bailey filed lawsuits last week against Glass Lewis and Institutional Shareholder Services, two shareholder voting advisory firms that together hold a virtual duopoly in that market.

These firms advise institutional shareholders—typically asset and pension managers—how they should vote on corporate issues. These fund managers are in turn voting as proxies on behalf of the investors in their funds. 

Bailey’s lawsuits allege that Glass Lewis and ISS have leveraged their position to push a left-wing agenda, including ideologies like the environmental, social and governance–or ESG—movement, and diversity, equity and inclusion—or DEI. Critics of the ESG industry say that activists have used the proxy voting process to compel companies to take up political causes, regardless of the interests or wishes of shareholders and consumers.

“It’s important to protect Missouri consumers against firms like this that are in breach of their fiduciary duties,” Bailey told The Daily Signal. “These are two foreign-owned firms that have hijacked the U.S. economy and are pushing a radical left-wing agenda that would never get passed through a deliberative legislative body that was democratically elected.”

ISS is owned by Deutsche Börse Group, a German firm, and Glass Lewis is owned by Canadian investors Peloton Capital Management and Stephen Smith. Both firms have denied that their proxy advisory work has any political bias.

The Missouri lawsuit follows a number of other GOP-led states that have investigated or charged the proxy agents over alleged bias, including a 2023 letter signed by 23 state attorneys general that cited “evidence of potential breaches [of fiduciary duty] by ISS and Glass Lewis with respect to advocating for and acting in alignment with climate change goals.” Bailey has also issued subpoenas for documents from the proxy agents in connection with recommendations and services regarding ESG, DEI, climate change, racial audits, debanking proposals, and sanctions campaigns against Israel.

“We understand that in previous instances when states have taken similar action that these two firms, Glass Lewis and ISS, have refused to comply with the investigative authority of the state,” Bailey said, “so we’re preemptively launching a suit to enforce the subpoenas.”

Will Hild, executive director of Consumers’ Research, expressed support for the Missouri lawsuit, telling The Daily Signal that ISS and Glass Lewis “have been using their market position to push an anti-consumer agenda for the last decade at least, violating their duties of loyalty to their customers and hurting both American corporations and the consumers they serve.”

ISS and Glass Lewis together have a 90% share of the proxy advisory market as of 2021, according to a 2024 report by University of Utah finance professor Chong Shu, while other estimates have placed their combined market share as high as 97%.

“When ISS recommends voting against a director’s election, its customers are 20 percentage points more likely to vote against that director than investors who are not ISS subscribers,” Shu stated. “Similarly, when Glass Lewis recommends voting against a director, its customers are 13 percentage points more likely to oppose that director compared to other investors.”

Facing pressure from activists, many companies have taken up left-wing political causes, including the Walt Disney Company fighting Florida’s Parental Rights in Education law, Delta Air Lines and Coca-Cola fighting voter I.D. laws in Georgia, and Target and Bud Light taking on gender issues.

In a number of cases, these actions sparked a backlash from consumers and shareholders.

Conservative activist Robby Starbuck has launched an online campaign in which he publicized DEI programs at companies including Meta, McDonald’s, Walmart, Boeing, Molson Coors, Lowe’s, Ford, Jack Daniels, Harley Davidson, John Deere, Tractor Supply, Toyota, Nissan, Caterpillar, Stanley Black & Decker, DeWalt Tools, Indian Motorcycle, Craftsman and Polaris. In most of these cases, the publicity and negative consumer feedback drove the companies to drop or downplay these programs.

The proxy advisors have also gotten the attention of lawmakers on Capitol Hill.

Writing to the two firms in May, Senate Banking Committee Chair Tim Scott, R-S.C., together with Michael Rounds, R-S.D., and Bill Hagerty, R-Tenn., expressed their “concerns with the expansive, opaque, and ideologically driven influence your firms exert over the corporate governance of U.S. public companies.”

The lawmakers stated that the proxy agents’ “near-duopoly over proxy advisory services … have come to shape boardroom decisions, shareholder votes, and corporate strategy across the American economy, while influencing U.S. public policy on important economic, environmental and social issues.”

In a June 10 letter, Glass Lewis CEO Bob Mann responded that the company has no political agenda and that its recommendations aligned with corporate management in 94% of cases.

“We routinely recommend against shareholder proposals on environmental and social issues that—however worthwhile as an environmental or social goal—have not demonstrated a nexus to shareholder value,” Mann stated.

ISS CEO Gary Retelny stated that ISS “has over recent months been subject to a growing chorus of partisan attacks meant to malign our work and brand us as ‘woke activists’ and ‘social engineers’ pushing an ESG agenda … ISS is not an activist or advocacy organization.”

The Daily Signal contacted ISS and Glass Lewis to comment for this article but did not receive a reply as of press time.

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