In this week’s edition of Economy and Society:
- Trump weighs executive order to limit proxy advisors
- FTC investigates ISS and Glass Lewis
- EU votes to roll back major ESG rules
- Companies resume sustainability spending and goal-setting
- Global ESG funds see Q3 outflows
In Washington, D.C., and around the world
Trump weighs executive order to limit proxy advisors
What’s the story?
The Trump administration is considering an executive order that would reduce the influence of Institutional Shareholder Services (ISS) and Glass Lewis, the two largest proxy advisory firms in the United States, according to the Wall Street Journal. Officials are reviewing whether the firms exert too much control over how institutional investors vote on corporate matters. The effort focuses on concerns that ISS and Glass Lewis shape outcomes on contested shareholder votes and board elections rather than simply offering neutral research and recommendations.
Why does it matter?
Any limits on ISS and Glass Lewis could shift how major investors cast votes at shareholder meetings. Critics say the firms’ recommendations increase support for environmental, social, and governance (ESG) proposals in ways they view as harmful or inappropriate, while supporters argue the same recommendations strengthen ESG oversight and provide valuable analysis for investors. Reducing the firms’ influence could shift influence away from third-party recommendations and toward company leadership or large asset managers.
What’s the background?
Republican House members have recently scrutinized proxy advisory firms. In May 2025, a House subcommittee held a hearing examining how proxy advisors influence shareholder voting and whether additional oversight is needed. These earlier actions highlighted ongoing questions about the role proxy advisors play in shaping corporate governance across public companies. Proxy voting allows shareholders to authorize others, such as asset managers or advisory firms, to vote on their behalf.
FTC investigates ISS and Glass Lewis
What’s the story?
On Nov. 12, 2025, the Federal Trade Commission launched an antitrust investigation into ISS and Glass Lewis. The inquiry examines whether the firms’ competitive practices and shareholder voting recommendations violate federal antitrust laws. Investigators told Glass Lewis in late September that they were reviewing whether the firm and others engaged in unfair methods of competition related to advice on climate- and social-related shareholder proposals. Glass Lewis stated that the inquiry remains non-public and emphasized that it has not been accused of legal wrongdoing.
Why does it matter?
The investigation increases government pressure on the proxy advisory sector at a time when the Trump administration is weighing broader changes to shareholder voting rules. The inquiry signals heightened federal interest in how competitive practices in this sector shape the advice investors receive on key proposals.
What’s the background?
Republican state attorneys general have stepped into the debate over the proxy-advisory industry. In March, Florida Attorney General James Uthmeier (R) launched an antitrust review citing concerns about the firms’ concentrated influence on investor voting decisions. In July 2025, Missouri Attorney General Andrew Bailey (R) opened an investigation into ISS and Glass Lewis, alleging the firms prioritized political agendas over fiduciary responsibilities. In October, Glass Lewis announced it would end benchmark voting recommendations and shift to customized guidance amid rising political scrutiny.
EU votes to roll back major ESG rules
What’s the story?
The European Parliament voted last week to narrow the scope of the EU’s sustainability reporting and due-diligence rules. Lawmakers approved thresholds that exempt roughly 92% of companies originally covered under the Corporate Sustainability Reporting Directive (CSRD) and limited the Corporate Sustainability Due Diligence Directive (CSDDD) to only the largest firms. The decision also removes the requirement for covered companies to prepare climate transition plans. The vote followed weeks of internal debate after earlier compromise proposals failed, and lawmakers shifted toward a position backed by center-right and farther-right parties.
Why does it matter?
The vote represents a major revision of sustainability regulation and signals growing political resistance to mandatory ESG reporting. Scaling back the directives reduces compliance burdens for multinational companies and may weaken the EU’s influence over global reporting standards. Eliminating transition-plan requirements lowers pressure on large firms to publicly align their strategies with long-term climate goals.
What’s the background?
EU officials had recently signaled openness to softening sustainability rules following pushback from the U.S. and multinational firms. Earlier proposals would have narrowed the directives, but the European Parliament rejected a compromise package in October, sending the issue back for negotiation. Parliament will now begin talks with the EU Council to finalize revisions by year-end.
On Wall Street and in the private sector
Companies expand sustainability spending and goal-setting
What’s the story?
New survey data from Deloitte and Accenture indicate that U.S. companies have resumed sustainability activity after slowing in 2024. Deloitte’s 2025 C-suite Sustainability Report found that 83% of companies across 27 countries increased sustainability investments over the past year. Accenture’s Destination Net Zero 2025 report similarly found companies restarting decarbonization and net-zero goal-setting after pausing new commitments last year.
Why does it matter?
The surveys indicate that companies are advancing sustainability efforts even as regulatory and investor pressure to do so has declined since 2022. The findings point to internal business drivers—such as revenue gains, cost savings, and compliance needs—as key factors shaping climate-related decision-making.
What’s the background?
Deloitte surveyed more than 2,100 executives in 27 countries. Respondents said technology adoption and AI remain major enablers of sustainability progress. Accenture’s research found that firms that paused decarbonization planning in 2024 are re-engaging with long-term climate strategies for 2025.
Global ESG funds see Q3 outflows
What’s the story?
Global ESG mutual funds and exchange-traded funds (ETFs) reported about $55 billion in redemptions in Q3 2025, according to Morningstar. Despite the redemptions, total global sustainable fund assets rose to $3.7 trillion because of market gains. Most of the decline came from UK-based BlackRock funds after a major pension client moved assets into custom ESG portfolios. Even without that shift, global ESG funds still posted a $7.2 billion net outflow, compared with $6.2 billion in inflows in Q2. Fixed-income ESG funds were the only segment to gain new money.
Why does it matter?
The results indicate that investor demand for ESG funds remains weak even after removing the one-time pension shift. Continued withdrawals may shape how asset managers position ESG products and how investors balance sustainability goals with performance, fees, and broader market conditions.
What’s the background?
Morningstar’s review covers sustainable mutual funds and ETFs globally. European ESG funds experienced withdrawals, and U.S. sustainable funds marked their 12th straight quarter of outflows. The report also notes that sustainable funds outside Europe and the U.S. attracted more than $1 billion in new money during the quarter.