The post Congress Is Shining A Light On Proxy Advisory Firms appeared on BitcoinEthereumNews.com.

Washington DC cityscape getty The House Committee on Financial Services’ April 29th hearing titled “Exposing the Proxy Advisory Cartel: How ISS & Glass Lewis Influence Markets” examined “the role and influence of proxy advisory firms…in shaping corporate governance and shareholder voting outcomes.” It’s about time. Proxy advisory firms exist because the SEC requires institutional investors to vote on all matters put forth in proxy statements, or the measures voted on during shareholder meetings. For most institutional investors keeping up with all the issues raised during shareholder meetings is overwhelming, so they turn to proxy advisory firms for help. Proxy advisory firms help institutional investors manage this herculean task. They do the leg work and advise institutional investors on how to vote on the thousands of shareholder resolutions that arise every year. Two proxy advisory firms – ISS and Glass Lewis – control 97% of the market. Given the sheer volume and importance of proxy statements every year, these two firms have acquired tremendous influence over corporate governance. Unfortunately, inefficiencies plague the proxy advisory market. As the Environmental, Social, and Governance (ESG) issue exemplifies, these inefficiencies weaken corporate governance to the detriment of effective management. While the pressure to implement ESG programs has lessened as of late, numerous ESG programs continue to be raised via shareholder proposals that include requirements to report on companies’ greenhouse gas emissions. When it comes to ESG proposals, the two major proxy advisory firms establish their position without adequate transparency and use a one-size-fits all approach despite the vast differences that ESG programs can have on different companies. As a result, their ESG recommendations can be detrimental for many companies. For instance, when examining the influence of the proxy advisory firms, the American Council for Capital Formation concluded that the ESG recommendations from the proxy advisory…

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Filed under: News - @ April 29, 2025 4:26 am