President and CEO
Institutional Shareholder Services, Inc.
1177 Avenue of the Americas, 14th Floor
New York, New York 10036
Glass, Lewis & Co.
255 California Street, Suite 1100
San Francisco, CA 94111
Dear Mr. Retelny and Mr. Cameron:
As over 100 investors and financial professionals serving thousands of clients and managing and advising on over $250 billion (and counting) in assets, we call on both of your firms to:
Proxy Advisory Services are perceived as biased by a wide array of non-ESG-aligned stakeholders.
You have responded by pointing out that although your Benchmark policies represent your recommendations you do, nevertheless, provide other options for customers, for example, ones with a focus on ESG, on U.N. sustainability standards, on the concerns of organized labor or aligned with the concerns of U.S. Catholic bishops. However, each of these options is more supportive of ESG shareholder proposals than your own recommendations as found in your Benchmark policies.
You also provide one option referenced as management or board aligned. However, these policy recommendation guidelines still support ESG resolutions when those resolutions are proposed by management and oppose resolutions sponsored by groups committed to moving companies away from politicized ESG policies. In addition, your so-called “board-aligned policies” are often inconsistent and usually lean in a pro-ESG direction. For example, “board-aligned” recommendations sometimes favor "congruence" proposals which are used by activist groups to pressure companies to drop support for right-of-center non-profits, while they double down on support for politicized organizations like the Human Rights Campaign and the Southern Poverty Law Center. In other words, when shareholders raise concerns over bias against people of faith, “board-aligned” policies side with the board against proponents of equal transparency. But when ESG propopents ask for disclosure of lobbying or political spending, the board-aligned policies generally side against management and with the pro-ESG activists.
Board-aligned policies also tend to vote against key board members based on the advisory services' opinions that the board is insufficiently reflective of racial and gender diversity. The latter includes (in the case of at least one of you) a shift away from a focus on biological gender towards gender identity.
Furthermore, it appears that no Benchmark, Specialty or Thematic policy you offer currently supports disclosures regarding the risks of debanking along political or religious lines. Concerns over politicized debanking is a significant emerging category of risk that your firms have thus far refused to account for in your recommendations. The debanking of a pro-religious liberty organization founded by Ambassador Sam Brownback led to a resolution by investor and financial advisor David Bahnsen on the proxy card of JPMorgan Chase. Shareholders also filed similar proposals at other companies including PayPal, Capital One, Charles Schwab, and Mastercard.
Despite having a history of favoring disclosure as well as public scrutiny by attorneys general and state financial officers over the debanking of former Ambassador Brownback, both of your firms voted against the Chase resolution along with all similar proposals. There is currently a great deal of public controversy over Bank of America’s recent decision to debank a ministry that serves widows and orphans in Uganda, and which is likely to be a subject of proxy engagement in the next annual meeting season.
Your two firms hold outsized influence on how the vast majority of proxy votes are cast. By taking the three steps outlined above, you have the opportunity to repair the breach in trust between shareholders working to de-politicize portfolio companies and proxy advisory services.
Sincerely, The Undersigned