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Sean D. Reyes
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Attorney General Reyes Leads 21-State Challenge to Proxy Firms’ ESG Practices 

January 17, 2023

Today, Attorney General Sean D. Reyes is leading a 21-state coalition that is challenging the ESG practices of two proxy advisory companies, International Shareholder Services, Inc. (“ISS”) and Glass, Lewis & Co. The attorneys general specifically take issue with how ESG considerations affect ISS and Glass Lewis’s proxy voting recommendations that conflict with the financial interests of their clients.

“Because these firms have a duopoly in the proxy advisory market, they exercise enormous influence in advancing the ESG movement,” said Attorney General Reyes. “A proxy advisor must prioritize the economic value of their clients’ investments. Unfortunately, it appears these two companies are prioritizing political activism over the best interests of Utah and its citizens.”

Both ISS and Glass Lewis support the priorities established by an international group of financial institutions committed to aligning their lending and investment portfolios with net-zero emissions by 2050. By letting net-zero inform their proxy advice, ISS and Glass Lewis are abandoning their fiduciary duties to their clients, including Utah, and adopting the radical environmental agenda that experts predict are not possible.

Additionally, ISS and Glass Lewis have also pledged to recommend votes against certain directors on boards that they view as having insufficient racial, ethnic, or sex-based diversity under arbitrary quotas they established.

The letter states, “your actions may threaten the economic value of our States’ and citizens’ investments and pensions—interests that may not be subordinated to your social and environmental beliefs, or those of your other clients.”

Attorney General Reyes and his colleagues seek information and assurances from ISS and Glass Lewis that they will uphold their legal obligations in performing proxy advisory services.

Attorney General Reyes has taken other actions against ESG practices, such as pressuring Vanguard to leave the “Net-Zero Baking Alliance”, investigating Morningstar’s anti-Israel bias, opposing the SEC’s proposed rule governing ESG disclosures, and objecting to S&P’s publishing of ESG credit indicators as part of its credit ratings.

Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, Texas, Virginia, and West Virginia also joined the Utah-led letter.

Read a copy of the letter here.