President Donald J. Trump signed an Executive Order aimed at curbing the influence of proxy advisory firms that critics say have prioritized political agendas over the financial interests of American investors. The move is intended to protect retirement savings in 401(k)s, IRAs, and pensions from policies driven by “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) priorities.
The Executive Order directs the Securities and Exchange Commission (SEC) to review and, if necessary, rescind or revise rules and regulations affecting proxy advisors. It also requires the SEC to enforce anti-fraud provisions, assess conflicts of interest, and examine whether registered investment advisers breach fiduciary duties by following proxy advisor recommendations tied to non-financial, politically-driven factors.
In addition, the Order calls on the Federal Trade Commission, in consultation with the Attorney General, to determine whether proxy advisors are engaging in unfair competition or deceptive practices. The Department of Labor is also instructed to strengthen fiduciary rules under ERISA and increase transparency, ensuring proxy advisors act solely in the financial interest of American workers and retirees.
Two foreign-owned firms, Institutional Shareholder Services and Glass Lewis, dominate more than 90% of the proxy advisory market. According to the administration, these firms routinely advocate for politically motivated actions such as racial equity audits, aggressive greenhouse gas emission reductions, and other policies aligned with DEI and ESG priorities. Critics argue that these recommendations, often adopted by clients without independent analysis, give proxy advisors outsized influence over shareholder proposals, board composition, and executive compensation—sometimes at the expense of investor returns.
“President Trump is stopping foreign-owned proxy giants from using Americans’ retirement accounts to force leftist policies on U.S. companies,” the White House said in a statement. “Conflicts of interest, lack of transparency, and one-size-fits-all voting policies have eroded trust and hurt the value of retirement savings for everyday Americans.”
The move is part of a broader effort by Trump to expand financial opportunities for workers and retirees. Earlier initiatives include the Working Families Tax Cuts Act, which exempts most seniors from paying taxes on Social Security benefits, and a separate Executive Order allowing 401(k) investors access to alternative assets for better returns and diversification.
On the campaign trail, Trump had vowed to “keep politics away from America’s retirement accounts forever,” promising that funds would be invested to benefit American workers rather than advance what he described as “radical left” agendas.
Supporters say the latest Executive Order fulfills that promise by restoring confidence in the proxy advisor industry and ensuring that millions of Americans can grow their retirement savings without political interference.