President Donald Trump’s newest executive order targets a pair of influential institutions at the heart of American corporate governance: Institutional Shareholder Services (ISS) and Glass Lewis. By directing federal agencies to scrutinize how these firms apply diversity, equity and inclusion (DEI) and ESG frameworks in voting recommendations, the administration is challenging a system that has shaped billions in shareholder decisions. The order delivers a symbolic victory for Tesla CEO Elon Musk, who has long clashed with both firms over their opposition to elements of his compensation and governance proposals.

A Direct Challenge to Advisory Power

Proxy advisory firms wield outsized influence over corporate elections, executive pay packages and shareholder proposals. ISS and Glass Lewis serve major institutional investors managing trillions of dollars globally. Their assessments often dictate how pension funds, insurers and asset managers vote in thousands of annual meetings. That influence has increasingly frustrated corporate leaders who argue that the firms apply rigid governance standards and that ESG considerations have, in some cases, eclipsed financial priorities.

By calling out the firms for allegedly advancing “politically motivated agendas,” Trump is tapping into broader conservative frustration with ESG-linked recommendations. The political moment is critical: after years of growing corporate adoption of DEI and sustainability frameworks, significant pushback is now reshaping policy across boardrooms.

Legal experts say the order represents less a direct regulatory overhaul and more a strategic shot across the bow. Even without new rules, heightened federal attention could pressure the firms to adjust methodologies or increase transparency in their governance scoring models. Companies that felt constrained by proxy advisers’ influence now see a potential rebalancing of power.

Corporate America Reacts to a Shifting Landscape

Musk has been one of the most vocal critics of ISS and Glass Lewis, accusing them of undermining shareholder democracy and obstructing Tesla’s governance reforms. The firms have repeatedly recommended voting against his multibillion-dollar compensation package and board restructuring efforts. JPMorgan CEO Jamie Dimon has raised similar concerns, calling the influence of proxy advisers “inappropriate” for U.S. corporate governance.

The executive order arrives at a moment when corporations, especially public-facing multinationals, are redefining their stance on ESG as investor sentiment becomes more polarized. Many firms have quietly scaled back environmental commitments or revised DEI targets after political pressure from states and major federal institutions.

Regulatory and Legal Stakes Intensify

The SEC and FTC will now evaluate whether ISS and Glass Lewis engage in practices that violate governance, transparency, or antitrust standards. This adds to broader legal challenges: Florida’s attorney general is already suing both firms under state antitrust statutes.

For now, ISS has signaled it will review the order, reaffirming its commitment to independence and global governance standards. Glass Lewis has not commented.

A Longer Regulatory Battle Ahead

While the executive order marks a clear political victory for Musk and other high-profile critics, its long-term impact will depend on investigations that may take months or years. Investor behavior, institutional mandates and legal rulings will determine whether the influence of proxy advisers meaningfully contracts—or whether the order ultimately serves as political signaling.