The effort to challenge proxy advisory firms on antitrust grounds appears to be intensifying with recent developments involving the Heritage Foundation’s anti-ESG (environmental, social, and governance) playbook. Traditionally, Republicans and corporations have sought intervention from securities regulators to limit the influence of firms like Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co., which dominate the proxy advice sector. Despite these efforts, success has been modest. The playbook by Heritage proposes antitrust enforcement as the next strategic step in this ongoing campaign.
The Heritage Foundation argues in a recent report that ISS and Glass Lewis effectively operate as a “duopoly,” warranting an investigation by either the Department of Justice or the Federal Trade Commission. This recommendation is part of a wider strategy against ESG initiatives that the Trump administration has partially implemented.
A notable example of the administration’s shift away from ESG policies includes the rescinding of the Biden-era diversity, equity, and inclusion requirements for federal contractors. This aligns with the Heritage Foundation’s broader push to curtail ESG considerations in corporate governance.
The focal point here is whether federal antitrust authorities will take action based on these calls for investigation into the market power and practices of the leading proxy advisory firms—the results of which could potentially redefine the landscape of proxy advice in the U.S.