23 attorneys general call on proxy advisors ISS, Glass Lewis to address biased voting recommendations

WASHINGTON – Led by Iowa State Attorney General Brenna Bird, 23 states recently joined a public letter calling on proxy voting advisory firms Institutional Shareholder Service and Glass Lewis to give equal treatment and provide needed transparency into their advice regarding shareholder resolutions that address a rising trend of politicized de-banking.

Sent to the two companies that account for 97 percent of proxy advisory services, the letter builds upon recent calls from 16 state treasurers 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.

As the letter points out, earlier this year 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—even while both companies 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.

“No American should have to worry that their bank will cancel them because of their political or religious views,” said ADF Senior Counsel and Senior Vice President for Corporate Engagement Jeremy Tedesco. “We commend Attorney General Bird and her colleagues for highlighting this crucial issue. It is wrong for ISS and Glass Lewis to effectively block attempts by conservative shareholders to hold America’s largest banks and payment processors accountable for the rising tide of politicized de-banking. 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.”

While billing themselves as viewpoint-neutral, both ISS and Glass Lewis regularly endorse shareholder resolutions for left-of-center causes such as ESG (environmental, social, and governance) and DEI (diversity, equity, and inclusion). At the same time, the firms have consistently opposed resolutions calling for transparency and internal reporting on potential instances of politically motivated de-banking—resolutions dismissed by ISS as “anti-ESG” along with nearly every other conservative proposal.

Meanwhile, examples of politicized de-banking continue to pile up. 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.

Earlier this year, for example, 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.

Find out more about Viewpoint Diversity Score and the Business Index at www.ViewpointDiversityScore.com.

Alliance Defending Freedom is an alliance-building, non-profit legal organization committed to protecting religious freedom, free speech, parental rights, and the sanctity of life.

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