Many Americans are not familiar with ISS and Glass Lewis, but they should be.
ISS and Glass Lewis hold a 97% market share in proxy advising services – and were recently dubbed by the Wall Street Journal a “duopoly.” This means these two companies control the vote of millions of everyday Americans who own shares in publicly traded companies.
Yet, instead of acting in the best interest of the shareholders they serve, these giants are pushing the narrow political goals of Environmental, Social, and Governance or “ESG” activists, who are hostile to many American values, including free speech and religious freedom.
Meanwhile, Glass Lewis and ISS have continually blocked conservative shareholder resolutions – including important measures that hold America’s largest banks and payment processors accountable for potential instances of politically motivated de-banking. These resolutions – along with nearly all conservative proposals – were dismissed by both powerhouses, with ISS classifying them as “anti-ESG”.
Politicized de-banking hurts real people – and threatens everyone’s freedoms. No American should have to worry that their bank account could be canceled because of their religious or political views.
That’s why 23 state attorneys general sent a public letter to both companies warning them that they must stop encouraging discrimination and start living up to their promise to act in the best interests of shareholders.
Their letter builds upon recent calls from 18 state treasurers and auditors and over 100 investors and financial professionals who have over $250 billion in assets under management for ISS and Glass Lewis to provide viewpoint-neutral advice that would respect the deeply held values of shareholders from a wide spectrum of political and religious beliefs.
State attorneys general point out in their letter that proxy voting advice from ISS and Glass Lewis played an outsized role in the failure of de-banking transparency resolutions at JPMorgan Chase and PayPal earlier this year—even while both financial titans seem to have canceled accounts based on ideological rather than financial factors. In 2022, Chase closed the account of Ambassador Sam Brownback’s National Committee for Religious Freedom without sufficient explanation, while PayPal similarly disabled the account of a group called the Free Speech Union before reinstating it amid public backlash.
With everyone’s freedom on the line, it’s crucial that shareholders audit corporate practices that lead to de-banking.
As the letter points out, many of these instances stem from company policies that contain vague and subjective terms like “reputational risk” or “hate speech.” ADF’s 2023 Viewpoint Diversity Score Business Index found such problematic policies at 21 of the 44 largest financial institutions in the U.S.
This played out in April when Bank of America relied on its vague policies to close—without explanation—the account of ADF’s client Indigenous Advance, a Tennessee-based Christian charity, along with accounts belonging to an associated LLC and a supporting church. Bank of America has relied on the same unclear policies to de-bank other Christian ministries in recent years.
As examples of politicized de-banking continue to pile up, states warn that they will not stand idle while companies like ISS and Glass Lewis block shareholders from correcting this dangerous practice.
As ADF Senior Counsel and Senior Vice President for Corporate Engagement Jeremy Tedesco said, “If ISS and Glass Lewis refuse to make corrections on their own, states may have no alternative but to bring these firms to heel under existing state and federal law.”
Read the state attorneys general letter here.