Labor & Employment Law Daily Wrap Up, REPORTS—CEI blog spotlights report on trend of firms reducing support for ESG/DEI initiatives, (Dec 10, 2025)

By Rebecca E. Hoffman, J.D.

Unleash Prosperity’s “Putting Politics Over Pensions” report shows that firms’ proxy vote “grades” have improved since the last such report—twenty of the largest firms increased ESG opposition 60 percent.

Competitive Enterprise Institute (CEI), a Washington, D.C.-based tax-exempt organization that calls itself “America’s leading advocate of regulatory reform,” announced on its blog that the Committee to Unleash Prosperity (UP) had released “[a]n ESG report card for proxy voting,” explaining UP’s process for determining whether investment firms are “uphold[ing] their fiduciary responsibilities during proxy voting” by avoiding “pathways that deviate from wealth maximization.”

According to the report, “Putting Politics Over Pensions: The 2025 Unleash Prosperity report card on investment fund managers and proxy voting behavior,” the largest investment management firms, such as JPMorgan and Franklin Templeton, used to vote in favor of shareholder proposals focused on ESG and DEI, but have, since 2023, moved away from doing so, and toward prioritizing higher returns.

The research and advocacy group’s method for gathering this data involved looking at 275 investment management companies’ voting behavior with respect to “50 of the most extreme ESG-oriented resolutions in the 2024 proxy voting season.”

‘Anti-Fiduciary.’ Examples of the “Anti-Fiduciary 50” are “[a] resolution demanding that IBM adopt greenhouse gas emissions targets,” and “[a] resolution demanding that Amazon provide additional information about employee salaries broken out by race and gender.” It cites research showing that support for ESG efforts results in lower returns for shareholders, and thus, a fund manager shirks their fiduciary duties by promoting ESG strategies.

The report notes that institutions vote on behalf of shareholders, but shareholders may not agree with their choices. “Investors don’t want money managers steering their capital in the direction of political ideology,” UP said. During the 2025 proxy season, the number of shareholder resolutions in the social and environmental realm declined from 2024’s 400 to 224, and manager support for the resolutions has fallen. Meanwhile, anti-ESG proposals are ramping up, but support is low for these as well.

‘Handmaidens.’ The leading proxy advisory service firms, Institutional Shareholder Services and Glass Lewis, are “loyal handmaidens” for the ESG agenda, the report said. The two “provide cover for faithless managers” and “represent an implied threat to all corporate managements that they comply with the ESG agenda and sign costly ‘advisory contracts’—or be subjected to hostile advisory notes themselves.” The report bemoans the influence of these services, in their push for “anti-investor” resolutions.

According to UP, this annual report has helped to turn the tide of ESG investing, by revealing the proxy voting behavior of fund family managers. It also notes that individual investors “whose concerns about climate change or racial justice may outweigh their desire for a high return” may still invest in ESG-focused funds. “But when large investment firms put self-interest, politics or popularity over the shareholder returns of American retirees [who did not approve the proxy vote] there is a clear violation of the fiduciary duty,” the report concludes.

Companies: JP Morgan; Franklin Templeton

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