James Uthmeier launches probe of two proxy advisers, alleging illegal ESG policies, collusion

A pair of proxy advisers are under Florida’s microscope for potential violations of the state’s ban on so-called “woke banking” and government investment.

Attorney General James Uthmeier is directing an investigation into proxy advisory service firms Glass Lewis & Co. and Institutional Shareholder Services (ISS) for “potential misrepresentations” in their investing policies.

Uthmeier said the companies are suspected of including environmental, social, and governance (ESG) considerations and diversity, equity, and inclusion policies (DEI) in their investment advice to institutional investors.

They are also suspected of engaging in “unlawful collusion in adopting and enforcing these policies in violation of the Florida Antitrust Act of 1980,” he said in a statement, adding, “Civil Investigative Demands will be forthcoming.”

Uthmeier’s office has not provided evidence supporting its claim that Glass Lewis and/or ISS have violated state law, instead citing a general trend of ESG funds underperforming over the years.

But there’s ample substantiating material online.

“We won’t allow ESG goals to handcuff Florida businesses and threaten Floridians’ investments,” Uthmeier said.

“If these proxy advisers use their overwhelming market power to advance partisan political agendas rather than maximizing shareholder value, we will hold them accountable.”

Glass Lewis and ISS are big targets. A report published in the Journal of Financial Economics last year estimated that as of 2021, the two firms jointly held a 90% share of the proxy advice market for U.S. mutual funds, representing assets totaling $50.4 trillion combined.

The companies, and others like them, provide vote recommendations to institutional investors — large organizations like banks, pension funds, labor unions and insurance companies that make substantial investments in the stock exchange — and accordingly have significant sway over how major American companies are run.

According to Uthmeier, Glass Lewis and ISS told their clients and the public that their decisions were not politically motivated but based exclusively on economic factors.

In its 2025 policy guidelines, Glass Lewis asserted that it “evaluates all environmental and social issues through a lens of long-term shareholder value.” ISS similarly said it based the research on a “neutral and analytical perspective” and prioritizes client interests “first and above” its own.

“But pushing racial and gender quotas and attacking the concept of a meritocracy destroys long-term shareholder value,” a Thursday press release from Uthmeier’s office said.

“Investors were trapped with few alternatives for services because Glass Lewis and ISS control a large portion of the market and have the power to negatively impact corporations’ ratings if shareholders reject their advice or drop their services. These factors suggest very real anti-competitive and consumer protection infirmities.”

ESG is generally defined as a framework for evaluating a company’s sustainability and ethical impact and how those and other overtly non-financial factors may influence long-term financial performance. DEI is a set of principles and practices a company or institution can employ to promote the fair treatment and participation of all people.

Detractors say ESG deprioritizes profit and DEI, while well-meaning, can inadvertently spur racial, ethnic, religious and sexual discrimination.

Glass Lewis’ website includes a page summarizing its ESG Profile Data. It also has published details of its “methodology for assessing proxy statement disclosures related to board diversity,” which includes, among other things, considerations of “whether the board’s definition of diversity explicitly includes gender and/or race/ethnicity.”

ISS has a dedicated investment arm, ISS ESG, and ample online resources about the subject. In February, the firm said it would “indefinitely halt” considerations of the gender, racial or ethnic diversity of U.S. company boards when making voter recommendations, citing executive orders President Donald Trump signed.

This month, Glass Lewis announced that despite Trump’s orders, it would continue to offer DEI guidance.