On February 11, 2025, Institutional Shareholder Services (ISS) announced that it is suspending the consideration of diversity factors when making voting recommendations for directors at U.S. public companies. ISS’s press release acknowledges the “exceptional” circumstances surrounding its policy shift, but points to heightened scrutiny regarding diversity, equity and inclusion (DEI) issues in the United States since the recent change in presidential administrations. In fact, the press release points specifically to the Trump administration’s recent Executive Orders on DEI, which includes an order captioned “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (DEI EO) which revoked executive orders from previous administrations that promoted DEI. We wrote about the DEI EO here.
From the press release:
ISS will indefinitely halt consideration of certain diversity factors in making vote recommendations with respect to directors at U.S. companies under its proprietary Benchmark and Specialty policies. Specifically and for shareholder meeting reports published on or after February 25th, ISS will no longer consider the gender and racial and/or ethnic diversity of a company’s board when making vote recommendations with respect to the election or re-election of directors at U.S. companies under its Benchmark and Specialty policies.
Assessments and vote recommendations on directors of U.S. companies will continue to be evaluated under the other considerations outlined in the Benchmark and Specialty voting guidelines (accessible here) including independence, accountability and responsiveness.
ISS notes that it anticipates that “institutional investors and U.S. companies will have a range of perspectives on DEI, including whether and how companies can or should adapt their specific policies and practices to the evolving market and governmental activity.”
We wrote about ISS’s and Glass Lewis’s 2025 voting guidance here.
