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ISS is reviving efforts to combat misinformation about the proxy advisory industry, a move that comes amid heightened debate around shareholder proposals and corporate governance practices.
The proxy advisory firm has relaunched its “Facts and Fiction” initiative, originally established in 2021, to address what it describes as persistent misconceptions about the role and influence of proxy advisors in corporate governance. According to ISS, the project aims to provide factual information to counter narratives that mischaracterize the proxy advisory business model and its impact on institutional investors’ voting decisions.
“Despite extensive academic research and regulatory scrutiny that have repeatedly debunked false claims about proxy advisors, misinformation continues to circulate,” said an ISS spokesperson. “Our goal is to ensure that discussions about corporate governance and proxy voting are grounded in facts rather than fiction.”
The renewed effort coincides with the ongoing proxy season, during which shareholders vote on company resolutions spanning issues from executive compensation to environmental and social policies. This season has seen particularly contentious debates around ESG (environmental, social, and governance) proposals, with some corporations and business groups arguing that proxy advisors wield outsized influence over voting outcomes.
Industry observers note that proxy advisors like ISS and Glass Lewis have faced criticism from certain corporate interests and lobby groups who claim these firms have too much power over shareholder votes. However, multiple academic studies indicate that institutional investors typically develop their own voting policies and use proxy advisory services primarily as one information source among many.
“The data simply doesn’t support the narrative that proxy advisors control the voting outcomes,” explained Dr. Eleanor Martinez, a corporate governance researcher at Stanford University. “Most large institutional investors have sophisticated in-house governance teams that make independent assessments. They may consider proxy advisor recommendations, but ultimately vote according to their own policies and fiduciary duties.”
ISS’s revived initiative will include publishing fact sheets, research summaries, and data analyses on its website to address common misconceptions. The company emphasizes that it operates transparently, with publicly available voting guidelines that are updated annually based on extensive market consultations.
The timing of this effort is significant given recent regulatory developments. In 2020, the SEC under the Trump administration implemented rules imposing additional requirements on proxy advisory firms. However, the SEC under the Biden administration later announced it would not enforce certain aspects of these rules, reflecting the politically charged nature of the debate around proxy advisors.
Financial market experts point out that the debate extends beyond technical questions about proxy voting to broader issues about corporate accountability and shareholder rights. As institutional investors increasingly focus on long-term sustainability factors, the role of proxy advisors in providing research and recommendations on these issues has become more prominent.
“The proxy advisory industry exists because institutional investors need independent research to fulfill their fiduciary duties when voting on hundreds of thousands of ballot items each year,” noted James Wilson, director of an investor coalition. “The alternative would be for each institution to duplicate this research effort or, worse, to vote without proper analysis.”
The controversy surrounding proxy advisors reflects wider tensions in corporate America about who should influence corporate decision-making and what interests companies should prioritize. As issues like climate change, diversity, and executive compensation gain prominence on corporate ballots, the information provided by proxy advisors has become increasingly valuable—and increasingly contested.
ISS’s “Facts and Fiction” project represents an attempt to ensure that policy discussions about corporate governance are based on accurate information about how the proxy advisory industry actually functions. Whether it succeeds in changing the tenor of the debate remains to be seen, but the initiative highlights the significant role that information—and misinformation—plays in shaping corporate governance outcomes.
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14 Comments
Proxy voting is a critical part of corporate governance, so I’m glad to see efforts to combat misinformation. But the credibility of ISS’s campaign will depend on the objectivity of the information they provide.
Good point. The industry’s self-promotion should be taken with a grain of salt – independent verification of the ‘facts’ would lend more legitimacy.
The proxy advisory industry has faced criticism, so it’s not surprising they want to push back. But their ‘Facts and Fiction’ initiative will need to be transparent and evenhanded to be credible.
Agreed. Objective, third-party analysis of the proxy advisory role would likely carry more weight than self-promotion from the industry.
It’s interesting to see the proxy advisory industry pushing back against perceived misinformation. Transparency and factual information are important for informed shareholder voting on critical corporate governance issues.
I agree – misinformation can distort the debate and undermine confidence in the proxy process. Fact-based discussion is key.
Shareholders need accurate information to make informed voting decisions. While ISS has a vested interest, their ‘Facts and Fiction’ initiative could be helpful if executed transparently and without bias.
Agreed. Providing factual, balanced information is important, but the proxy advisory firms must avoid the perception of self-serving narratives.
Curious to see what specific ‘misconceptions’ ISS is aiming to address. The proxy advisory business model and influence is an important issue for shareholders to understand.
Yes, the details will be key. Shareholders deserve a clear, balanced picture of the proxy advisory firms’ role and impact.
The proxy advisory firms play an influential role in corporate governance, so it’s understandable they want to counter narratives they see as inaccurate. Curious to learn more about the specific claims they aim to debunk.
Yes, understanding the nature of the ‘misinformation’ claims will be important to evaluate the legitimacy of the proxy advisors’ concerns.
Proxy voting can be a complex and contentious issue. I appreciate ISS trying to provide more factual information, though of course one would need to assess the objectivity of their claims.
Good point. Any information from industry players should be scrutinized, even if the intent is to counter misinformation.