Policy Insight July, 7th 2025

Appeals court affirms proxy advice not a solicitation 

A July 1 decision by the US Court of Appeals for the District of Columbia upheld a lower court decision finding in favor of Institutional Shareholder Services’ (ISS) position that proxy advice is not a solicitation. 

What the Court said: 

“Proxy-voting advice rendered by a third party for a fee falls outside that definition,” the judges wrote. “It is simply a recommendation. The SEC’s effort to expand ‘solicitation’ to include such advice cannot be reconciled with the statutory text and its adoption of that definition in the 2020 Rule was contrary to law.”

Background: 

ISS challenged the rule by the SEC issued in 2020 that included a provision declaring proxy advice a solicitation. Subsequently, the SEC wrote a new rule removing several provisions addressing proxy advisors but left the original solicitation provision intact. To take a fun dive on definitions, read Nell Minnow’s blog post. 

What comes next:

The National Association of Manufacturers (NAM), who joined the case (the SEC withdrew from the case in 2024) has not indicated if it will appeal the July 1 decision to the Supreme Court. 

New report summarizes 2025 state legislative season

A new report by Pleiades Strategy shows 11 new state laws were passed in 10 states during the 2025 legislative session. 106 bills were introduced during the time frame.

The report tracked model legislation across all 50 states and found that they fell into 5 categories:

• 44 bills imposing civil liability on the private sector, most of which use a politically-charged definition of a “social credit score” or “ESG commitment” as evidence that an offense has been committed.

• 33 bills banning private sector ESG “scores,” most of which overlap with the civil liability bills. Bills attempting to ban ESG scores have circulated since the beginning of this trend, with legislators and proponents often falsely asserting that individual people are subject to a secret morality score by their bank.   

• 22 bills focused on restricting pension fund investments and related shareholder proxy voting activity. In the name of prioritizing investment returns for retirees, these bills actually force pension fund managers to ignore material risks related to environmentally or socially negligent business practices.

• 19 bills weaponizing government contracts against the private sector, to deter a variety of corporate environmental or social risk mitigation efforts that are broadly labeled as “ESG” activities.

• 7 bills attempting to ban government use of ESG “scores” or criteria, often in the context of awarding government contracts. Proponents and politicians have often appealed to fears over the “Chinese Communist Party” to justify such efforts.

What We Are Watching This Week

Twice a year, the federal government releases its Unified Agenda of Regulatory and Deregulatory Actions, or more commonly known, the RegFlex Agenda. Each agency in the federal government publishes its list of regulations it expects to propose and those that are in process.

Hit refresh, hit refresh:

We expect the “Spring” RegFlex Agenda to be published any day now. It will give us insight into what new SEC Chair Atkins hopes to achieve during his term as well as timing of other agency actions like the Department of Labor’s expected rulemaking on ESG considerations in retirement plans and proxy voting decisions.

Take it for a spin:

The Fall 2024 agenda is still posted but clearly out of date.