Attorney General Miyares Joins 21-State Challenge to Proxy Firms' ESG Practices

RICHMOND, VA – Attorney General Jason Miyares joined a 21-state coalition that is challenging the ESG (Environmental, Social, Governance) practices of two proxy advisory companies, Institutional Shareholder Services, Inc. ("ISS”) and Glass, Lewis & Co. The attorneys general specifically take issue with how ESG considerations affect ISS and Glass Lewis's proxy voting recommendations that conflict with the financial interests of their clients.

"Pressuring companies to align with a net zero emissions reduction target does not appear to be about transparency or maximizing shareholder value; instead, it seems to be focused on changing behavior, at the expense of Virginia consumers,” said Attorney General Jason Miyares. "China emits more than the United States, Europe, and Japan combined. However, given the companies' limited ability to affect Chinese emission rates, their actions have strengthened an authoritarian regime while weakening American companies' and punishing the American consumer.” 

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. By letting net-zero inform their proxy advice, ISS and Glass Lewis are abandoning their fiduciary duties to their clients, including Virginia, and adopting the radical environmental agenda that experts predict are not possible.

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 established.

The letter states, "your actions may threaten the economic value of our States' and citizens' investments and pensions—interests that may not be subordinated to your social and environmental beliefs, or those of your other clients.” Attorney General Miyares and his colleagues seek information and assurances from ISS and Glass Lewis that they will uphold their legal obligations in performing proxy advisory services.

Attorney General Miyares has taken other actions against ESG practices, such as investigating ESG ratings company Morningstar Inc. and its subsidiary Sustainalytics for alleged violations of Virginia's consumer protection laws and investigating six major banks over ESG investing. 

Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, Texas, and West Virginia also joined the letter authored by Utah Attorney General Sean Reyes. 

Read the letter HERE.

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