09 April 2026
5 min
The sustainability landscape continues to evolve, shaped by regulation, market practice and changing investor priorities. With this, expectations for asset owners, investment managers and companies are also changing. In our monthly sustainability blog, we aim to bring clarity by focusing on the developments we believe have the greatest relevance for investors.
The dominance of Institutional Shareholder Services (ISS) and Glass Lewis has grown alongside the institutionalisation of equity markets. Driven by regulatory mandates that treat proxy voting as an integral element of asset owners’ fiduciary duties, these firms have become a crucial outsourced research function for asset managers grappling with the sheer scale of global corporate governance.
However, that influence has not gone unchallenged. Successive Trump administrations have questioned the role and independence of proxy advisors, with a key turning point in 2020 when the Securities and Exchange Commission (SEC) reclassified proxy advice as a form of ‘solicitation’. This change exposed advisors to legal liability for materially misleading statements and required them to share recommendations with companies in real time, giving issuers greater scope to contest unfavourable advice. While the Biden administration quickly rescinded previous restrictions, the return of the Trump administration in 2025 has reignited a battle that now poses an existential threat to the proxy advisory model. A new executive order, ‘Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors,’ alongside a systemic ESG backlash and aggressive litigation from Republican states, has placed ISS and Glass Lewis in an increasingly untenable position within the US market.
The impact on voting outcomes has been significant. During last year’s US proxy season, ISS supported fewer than 10% of sustainability-related shareholder proposals, down from 39% in 2024. Under its benchmark policy, support fell to just 7%, with no environmental proposals backed, compared with around half the previous year. Glass Lewis has been more resilient, supporting 21% of sustainability-focused proposals, down from 26%. Both firms are now adapting their models. Glass Lewis plans to discontinue its house policy from next year, shifting fully towards client-driven custom voting policies. ISS intends to retain its benchmark policy but is already revising it to be less prescriptive. These changes sit alongside a growing divergence between US-based and non-US asset managers. Among the ten largest managers globally, European firms supported an average of 48% of sustainability-related proposals, compared with just 2% for their US peers.
The changing attitude of proxy advisors towards sustainability proposals, alongside increasingly fragmented asset manager voting behaviour, creates a governance risk for asset owners. Without active oversight and appropriate interventions, voting outcomes may drift away from stated investment beliefs and stewardship policies. This places greater responsibility on asset owners to understand the voting policies that their managers are implementing on their behalf and to ensure that expectations are appropriately aligned. This is particularly important at a time when UK asset owners believe that ESG’s importance is rising, despite a perceived industry backlash. The growing availability of voting choice mechanisms could help asset owners better implement their own policies.
The Principles for Responsible Investment (PRI) has issued engagement guidance on artificial intelligence (AI), setting out practical examples of how investors can apply responsible investment principles in this area. The guidance covers a range of steps investors could take, including identifying which AI applications investee companies are deploying, clarifying board oversight and accountability for AI use, assessing the environmental impacts of AI infrastructure, particularly energy and water use, and seeking transparency around AI use cases, safeguards and reporting.
In our Q4 News and Views, we highlighted that AI presents a wide range of risks that require careful oversight. As adoption accelerates, these risks are becoming more complex, interconnected and potentially systemic, increasing the importance of robust governance at every level. However, governance and regulation are struggling to keep pace with the speed at which AI is evolving, contributing to what the PRI describes as an “AI governance gap”. In this context, asset owners have a role to play. Through stewardship, they can press asset managers and investee companies to demonstrate strong oversight, clear accountability and effective risk management for AI use. Proactive engagement on AI governance, transparency and safeguards is increasingly important if investors are to manage emerging risks and protect long term value.
If you’d like to discuss these developments or explore how we can support you, please get in touch.
This blog is based upon our understanding of events as at the date of publication. It is a general summary of topical matters and should not be regarded as financial advice. It should not be considered a substitute for professional advice on specific circumstances and objectives. Where this blog refers to legal matters please note that Hymans Robertson LLP is not qualified to provide legal opinion and therefore you may wish to obtain independent legal advice to consider any relevant law and/or regulation. Please read our Terms of Use - Hymans Robertson.
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