Proxy adviser Glass Lewis will continue to consider boardroom diversity when advising how to vote at U.S. company annual meetings, but plans to be clearer about the counter argument for critical vote recommendations to help clients avoid rising political risks.
The change comes amid a wave of retreat by U.S. corporations from their diversity, equity and inclusion (DEI) efforts, under threat of legal action by U.S. President Donald Trump’s Justice Department.
The decision by Glass Lewis to remain largely committed to diversity follows a review of its policies and after proxy advisor rival Institutional Shareholder Services last month said it would no longer consider diversity when making its boardroom recommendations.
In an e-mail to clients seen by Reuters, Glass Lewis said it will stand by its 2025 benchmark guidelines for U.S. companies, which include that shareholders vote against certain directors at some of the largest U.S. companies whose boards lack gender, racial or LGBTQ diversity.
But when it recommends votes against a director in any way related to diversity, Glass Lewis said it will also flag information that could support an alternative vote by the client.
“This approach allows Glass Lewis to deliver the vote recommendations expected by clients while also clearly flagging the potential risk that may result from an AGAINST vote decision and providing a clear path should some clients choose to vote FOR the proposal,” the firm said.
A Glass Lewis spokeswoman said it also will likely include more context when making recommendations on diversity-related shareholder proposals.
Glass Lewis and ISS dominate the U.S. market for selling recommendations about how investors should vote at corporate meetings on matters such as boardroom elections or executive pay. Glass Lewis counts some 1,300 clients globally including top pension plans, mutual funds and asset managers with more than $40 trillion in collective assets.
Their policies are widely used by investors including mutual funds and pension plans which may not have the resources to do due diligence on every company in their portfolio.
“Certainly, we would have preferred not to have had to deliberate over long-standing policy guidelines on board diversity and DEI shareholder proposals, but the U.S. Administration’s opposition to DEI is compelling companies, institutional investors and their proxy advisors to consider changes, now or in the future,” Glass Lewis’ note said.
The move echoes steps taken by major asset managers including BlackRock BLK.N and Vanguard, which faced pressure over their voting decisions and in response looked to give clients more control.
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