On December 11, 2025, President Trump issued an Executive Order titled, “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors” (the “Proxy Advisor Order”). The Proxy Advisor Order focuses on the behavior of the two main proxy advisory firms – Glass Lewis & Co, LLC and Institutional Shareholder Services, Inc. – and expresses concern over the concentration of influence these proxy advisors have over corporate proxy voting with regard to “diversity, equity, and inclusion” and “environmental, social, and governance” (ESG) matters. The order calls for action by both the Securities and Exchange Commission (SEC) and the Department of Labor (DOL).
Proxy advisors are used by fund managers (mutual funds, ETFs and separately managed funds) to review and provide recommendations regarding shareholder votes in a manner that some managers feel unable to match with similar cost efficiencies.
With respect to the DOL, the Proxy Advisor Order revives the push-and-pull over proxy voting in retirement accounts, whether that be a corporate pension, a 401(k) or a 403(b). Secretary of Labor Lori Chavez-DeRemer has responded to the order by committing to review whether a proxy advisor’s activity meets the definition of fiduciary investment advice.
These topics of ESG and fiduciary investment advice status should be very familiar to those in the retirement plan community. Each of these topics has been the subject of multiple regulations, guidance and lawsuits in the past decade. The language used in the Proxy Advisor Order includes “non-pecuniary factors” undermining the value of ERISA plans – harkening back to the 2020 version of the proxy regulation. Both the definition of fiduciary investment advice and proxy voting were subject to rulemaking in the Biden administration, and earlier this year the Trump administration ceased to defend these rulemakings in courts within the Fifth Circuit.
While retirement plans can expect a reboot of the regulations and investors may anticipate SEC action on proxy advisors, no immediate actions are required from investors for the time being.
For any questions related to this Executive Order, please contact Allie Itami, or your regular Lathrop GPM attorney.