For many years “proxy advisory” services have been provided by a duopoly comprising two companies, Glass Lewis and Institutional Shareholder Services, with a combined market share of 97 percent engendered by blatant political favoritism.

“Proxy advice” means recommendations to investors, retirement funds and large asset managers holding major stakes in public companies on how to vote on shareholder motions and other such proposals.

Because of deeply perverse recent rulemaking both formal and informal, at the Securities and Exchange Commission, the proxy advisory process has been transformed into one in which large institutional shareholders in a given company are virtually required to accept the recommendations of the proxy advisors. In particular, an important SEC rule (Rule 14a-8) has been changed to require firms to consider resolutions of “wider societal interest.” The upshot of this system: Utterly without statutory authority, this proxy advisory duopoly has become a de facto regulator of public companies.

The proxy advisors can make recommendations that do not affect their own financial interests. Accordingly, they have indulged their political preferences, with little concern for the interests of retirees and shareholders.

The result has been a wave of proxy proposals promoting “environmental, social, and governance” objectives, the central examples of which are various greenhouse gas and climate proposals, discrimination against fossil fuel investments, the pursuit of racial and........

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