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(Jackson, Mississippi) Mississippi Attorney General Lynn Fitch joined a 21-state coalition that is challenging the ESG practices of two proxy advisory companies, International Shareholder Services, Inc. (ISS) and Glass, Lewis & Co. The Attorneys General specifically question how ISS and Glass Lewis’s commitments to net-zero emissions goals inform their proxy voting recommendations that may conflict with the financial interests of their clients.
“These companies are entrusted with public funds not so they can pursue their own agenda,” said Attorney General Lynn Fitch, “but so they can pursue the highest return for the people whose money it is. We will hold companies like these accountable to their fiduciary duties.”
Both ISS and Glass Lewis support the priorities established by an international group of financial institutions committed to aligning their lending and investment portfolios with net-zero emissions by 2050. For instance, as the Generals write, “For companies that are on the Climate Action 100+ Focus Group list, ISS has announced that it will ‘generally vote against’ relevant directors if the company does not implement ‘[a]ppropriate [greenhouse gas] emissions reduction targets’ that must ‘increase over time.’”
Similarly, the Generals note in their letter that Glass Lewis “recently recommended that shareholders reject the climate plan from Woodside Petroleum based on a concern that it did not do enough to reduce customers’emissions. Put another way, Glass Lewis faulted the company for not having a good enough plan to get its customers to stop buying its own product.” By letting the net-zero agenda inform their proxy advice, ISS and Glass Lewis are abandoning their fiduciary duties to their clients.
Additionally, ISS and Glass Lewis have also pledged to recommend votes against certain directors on boards that they view as having insufficient racial, ethnic, or sex-based diversity under arbitrary quotas they’ve established. Attorney General Fitch and her colleagues seek information and assurances from ISS and Glass Lewis that they will uphold their legal obligations to the States and citizens whose investments and pensions they represent in performing proxy advisory services.
In addition to Attorney General Fitch, the Attorneys General from Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, Texas, Virginia, and West Virginia also joined the letter authored by Utah Attorney General Sean Reyes.
Read the letter here.
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