Amid the new U.S. administration’s campaign against diversity, equity and inclusion (DEI) practices, proxy advisory firm Institutional Shareholder Services (ISS) said it will no longer consider race and gender when forming its voting recommendations for U.S. corporate directors.
Citing the recent issuance of executive orders on DEI from the new administration — including a mandate to eliminate all DEI jobs, policies and offices within the federal government, and to drop DEI requirements from government contracts — and increased attention on these policies generally, ISS said its shareholder meeting reports published after Feb. 25 will not consider race, gender, or other diversity factors when making director voting recommendations.
“In light of these developments, ISS will indefinitely halt consideration of certain diversity factors in making vote recommendations with respect to directors at U.S. companies,” it said in a statement published Tuesday.
“We anticipate 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,” it also noted.
ISS announced the shift in its approach to voting recommendations outside of its regular process for setting its voting policies ahead of the upcoming proxy season, which involves public consultation.
“On an exceptional basis, ISS also considers updates to its policies in light of relevant legal and regulatory changes and/or other emerging issues affecting investors and their portfolio companies,” it said.