Glass Lewis and ISS (Institutional Shareholder Services) have 97% market share of the Proxy service market and conflicts of interest.
ISS is majority owned by Deutsche Börse Group and along with ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS’ 3,000 employees operate worldwide across 25 global locations in 15 countries. Its approximately 3,400 clients include many of the world’s leading institutional investors who rely on ISS’ objective and impartial offerings, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS’ expertise to help them make informed investment decisions.
86% of robovoting investors used ISS and 14% used Glass Lewis, reflecting the dominant market position of ISS. Robovoting institutional investors managed collectively more than $5 trillion in assets.
Wall Street banks strongly support ESG. ESG enables portfolio managers to sell investments that are virtually the same as other broad-based index funds yet charge fees that are multiples higher. However, these investment portfolios face a strict market test over the long-term – should ESG not provide stronger financial returns, as is likely, these funds will suffer financial outflows and eventually close.
In July 2020, the Securities and Exchange Commission (SEC) adopted a final Proxy Advisor Rule, establishing principles governing the conduct of proxy advisory firms, which help institutional investors execute voting on shareholder matters and advise them on how to vote their shares. The commission acted in response to growing concerns that two relatively small proxy advisory firms—Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. (Glass Lewis), each owned by private equity firms and together controlling more than 90% of the proxy advisory market—have assumed outsize influence over corporate voting matters. The commission’s new rule is intended to ensure that investment advisors are acting in the best interest of shareholders.
ESG programs are typically detrimental to corporate performance and rarely achieve their lofty aim.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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