Florida has accused two massive proxy advisor firms of politicizing American retirement accounts by promoting DEI and ESG, according to a lawsuit filed Thursday.
The suit from Florida Attorney General James Uthmeier accuses Institutional Shareholder Services (ISS) and Glass Lewis of pushing companies to adopt race and sex-based quotas and embrace climate activism. The two firms comprise about 97% of the market for proxy advice in the United States, providing investment managers with guidance and research on how to vote on shareholder proposals.
“Defendants have used this enormous influence to push their own dogmatic agenda, one that seeks to require publicly traded companies to strictly adhere to highly controversial—and, in some cases, illegal policies,” Uthmeier wrote in a copy of the lawsuit obtained by The Daily Wire.
“Quotas for outright racial balancing, gender ideology that promotes genders beyond male and female, and an insistence that concerns about global climate change should influence every company’s decision-making are Defendants’ basic requirements,” the suit added.
Uthmeier’s suit, filed in the Second Judicial Circuit of Florida, accuses the companies of two counts of violating Florida’s Deceptive and Unfair Trade Practices Act and state antitrust laws. Both firms are currently under investigation by the Federal Trade Commission over how they direct clients on social and climate issues.
Together, both firms work with hundreds of thousands of Florida employees’ retirement plans worth billions, according to the suit.
The suit states that the firms have pushed left-wing ideology by “recommending votes against corporate board members who are not the right gender or do not fall in line and affirmatively voice support for Defendants’ ideological agenda.”
Examples cited in the suit include Glass Lewis providing guidelines that include recommending against boards with less than one member of “an underrepresented community” on it. It defines “underrepresented” as non-white people or sexual minorities. It will also generally recommend against a board “that fails to provide explicit disclosure concerning the board’s role in overseeing [climate change] issues.”
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ISS has adopted similar guidelines, noting that it will generally vote against companies with no women on the board, against boards with no racial or ethnic diversity, and vote against companies it says have not taken “minimum steps” to address “climate change” risks.
“Florida is done allowing two unaccountable foreign-owned private corporations to manipulate shareholder votes behind closed doors,” Uthmeier told The Daily Wire. “ISS and Glass Lewis claim to be neutral advisors, but they use their near-total control of the proxy-voting market to push divisive political mandates that threaten retiree savings, distort corporate governance, and undermine the rule of law. That ends now.”
The suit was supported by Will Hild, the executive director of Consumers’ Research.
“We will continue to encourage and support aggressive enforcement action until ISS and Glass Lewis stop their abuses and commit to transparency, neutrality, and true accountability to the investors and consumers they are supposed to serve,” he said.
In August 2023, the House Judiciary launched an investigation into ISS and Glass Lewis, probing their partnership with climate activist groups and pushing to “decarbonize” corporations.
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