A group of 21 republican state attorneys general has written to Institutional Shareholder Services (ISS) and Glass Lewis questioning if their ESG policies may breach their legal obligations to the states’ investment vehicles.
In the January 17 letter, the states’ officials stated that both ISS and Glass Lewis have potentially violated their legal and contractual duties as proxy advisers, by advocating for and acting in alignment with climate change goals, and advocating for and acting in alignment with diversity, equity, and inclusion quotas.
The letter added “We [the states’ officials] question how such recommendations, and the policies that led to them, are based on the financial interests of the investment beneficiaries rather than other social goals, and if they are based on the latter, how that complies with your duties.”
“Moreover, your attempts to force companies identified by Climate Action 100+ to achieve ’net-zero emissions’ and ’to set short- and medium-term targets in line with’ the Paris Agreement appear unsupported by your duty to consider only the economic value of investments,” the letter contended.
The states’ officials noted that states also have a constitutional obligation to treat individuals equally without regard to their race or sex, and that ISS and Glass Lewis’ advocacy for quotas and equity audits could expose states and companies to “significant legal liability for discriminating on prohibited bases.”
The letter concluded with a list of 10 questions and sought assurance from the proxy giants that they will cease such activity and “uphold their legal obligation” to the states and their citizens.
The letter cited a January 31 deadline by which Glass Lewis and ISS are asked to respond.