Ky Attorney General Cameron Challenges ESG Investment Practices

Proxy Financial Advisory Companies ISS, Glass Lewis

FRANKFORT, Ky. (January 19, 2023) – Attorney General Daniel Cameron joined a coalition of 21 attorneys general in challenging the ESG (environmental, social, governance) investment recommendations of two proxy advisory companies, Institutional Shareholder Services, Inc. (“ISS”) and Glass, Lewis & Co. (Glass Lewis). In their letter, the attorneys general ask for assurance that the companies are properly prioritizing the returns of shareholders and are not violating state and federal laws.

“This is the latest effort by our office to ensure financial companies are upholding their fiduciary duty by appropriately prioritizing the fiscal interests of Kentuckians,” said Attorney General Cameron. “We joined this letter to ISS and Glass Lewis to ensure proxy advisory companies have the best interests of Kentucky shareholders in mind when making voting recommendations to institutional investors.”

Proxy advisory firms are independent research firms that provide voting recommendations for institutional investors on proxy measures at shareholder meetings. ISS and Glass Lewis are among the largest proxy advisory companies in the United States.

Both companies support the priorities established by the Net Zero Asset Managers Initiative, an international group of financial institutions committed to aligning their lending and investment portfolios with net-zero emissions by 2050. If net-zero prerogatives are informing the companies’ proxy advice, ISS and Glass Lewis could be abandoning the fiduciary duty owed to their clients under Kentucky’s consumer protection laws.  

In their letter, the coalition asked ISS and Glass Lewis eleven questions to clarify how the companies will uphold their legal obligations in performing proxy advisory services.

Last October, Attorney General Cameron joined a multi-state investigation into six major banks for alleged anti-trust and consumer protection law violations related to ESG investment practices.

Attorney General Cameron joined attorneys general from Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, Texas, Utah, Virginia, and West Virginia in sending the letter.

To view a copy of the letter, click here